Inventory accuracy is one of the most important factors influencing a manufacturer’s ability to meet customer expectations, optimize production, and maintain profitability. Yet many organizations still struggle with inaccurate counts, unreported material movements, and delays in posting consumption or output. As manufacturing environments become more data-driven, companies are seeking stronger ways to connect their ERP systems with the shop floor to improve visibility, reduce waste, and maintain accurate inventory at all times.
For organizations using Microsoft Dynamics 365 Business Central, cycle counting is a foundational practice for improving stock accuracy. However, the effectiveness of cycle counting depends heavily on the processes and systems that feed information into Business Central. Manual entries, paper-based processes, and delayed reporting from the shop floor often create inconsistencies that make accurate cycle counting difficult.
In this blog, we look at why inventory accuracy is such a challenge, how to strengthen cycle counting in Business Central, and how a Manufacturing Execution System (MES) like MV2 can help create real-time accuracy from the shop floor to the warehouse.
Why Inventory Accuracy Matters More Than Ever
Inventory accuracy impacts nearly every function within a manufacturing organization. When stock levels do not reflect reality, companies face challenges such as:
• Production delays caused by missing or incorrect material
• Inaccurate planning and scheduling
• Excessive safety stock and increased carrying costs
• Stockouts that prevent customer orders from shipping
• Quality issues stemming from material misidentification
• Reduced trust in system data across departments
Poor accuracy also affects a company’s ability to implement lean practices and compete in an environment where customers expect fast, reliable order fulfillment.
The strongest manufacturers today treat inventory accuracy as a strategic priority rather than a warehouse-only responsibility. This includes integrating the shop floor directly with Business Central to capture real-time material movement.
Understanding Cycle Counting in Business Central
Cycle counting is the process of reviewing small segments of inventory regularly instead of conducting a full physical count once or twice a year. Business Central provides native capabilities that allow teams to:
• Assign items to cycle count frequencies
• Prioritize high-value or high-velocity items
• Schedule counts based on usage or ABC classifications
• Record variances and adjust inventory
These tools are powerful, but they are only as reliable as the data that feeds them. If production reporting and consumption are not posted accurately or promptly, cycle counting becomes a guessing game.
This is why the primary keyword for this topic, cycle counting in Business Central, is gaining more attention. Companies want to strengthen cycle count accuracy inside their ERP but need better processes and automation on the shop floor to support it.
The Most Common Causes of Inventory Inaccuracy on the Shop Floor
Manufacturers often know they have inventory issues but struggle to pinpoint the root cause. The following challenges frequently contribute to inaccurate counts:
1. Manual Data Entry and Delayed Posting
Operators and material handlers often rely on paper travelers or spreadsheets to record material consumption or finished goods production. This information may not be entered into Business Central for hours or days later. By that point, physical stock levels no longer match system records.
2. Unreported Scrap or Rework
If scrap, rejects, or rework are not posted in real time, inventory transactions become incomplete. This leads to overstated on-hand quantities and inaccurate cost calculations.
3. Incorrect Backflushing
Backflushing requires precise routing and BOM setup. If these configurations are inaccurate or if real material usage varies from the standard, inventory records become unreliable.
4. Missing Material Moves
When operators pull materials early, move components between work centers, or relocate items without posting transfers, the mismatch builds throughout the day.
5. Lack of Shop Floor Visibility
Supervisors and planners often cannot see WIP or consumption in real-time. Without visibility, issues are usually caught only during cycle counts or at the end of the period.
To solve these problems, manufacturers need to connect the shop floor directly to Business Central with digital tools that eliminate manual processes and ensure data flows instantly.
How to Strengthen Cycle Counting in Business Central
Improving cycle counting accuracy requires more than scheduling counts. It involves building a connected system where inventory transactions happen consistently, accurately, and in real time. Below are several strategies manufacturers can use to strengthen inventory accuracy in Business Central.
1. Standardize Material Handling Workflows
Many inventory issues originate from inconsistent material workflows. Start by creating standardized processes for:
• Issuing materials to production
• Posting consumption
• Recording scrap
• Completing production orders
• Moving WIP between stations
Clear, repeatable procedures help ensure that inventory data remains consistent throughout the day.
2. Use Reason Codes for Variances
Business Central allows organizations to record variances with reason codes. This provides clarity into why discrepancies occur and enables data-driven improvements. For example:
• Incorrect BOM
• Unposted scrap
• Damaged materials
• Picking error
• Machine malfunction
Reason codes transform inventory adjustments from one-off corrections into continuous improvement data.
3. Prioritize Items Using ABC Classification
Inventory accuracy is not equally important for every item. Business Central supports ABC analysis, which helps prioritize counting cycles based on:
• Annual usage value
• Criticality to production
• Lead times
• Supplier performance
High-value or high-turnover items should be counted more frequently, while low-impact items can follow a less frequent cycle.
4. Implement Real-Time Shop Floor Reporting with MES
This is where a system like MV2 MES becomes essential. Real-time reporting ensures that inventory changes are recorded instantly as operators perform their work. This eliminates the delays and inconsistencies that disrupt cycle counting accuracy.
MV2 MES integrates directly with Business Central to automate:
• Material consumption
• Output reporting
• Scrap and rework
• Inventory movements
• Production order completions
By capturing data at the source, MV2 prevents discrepancies before they occur. Learn more about MV2 MES at mv2software.com.
5. Reduce Reliance on Backflushing for Complex Jobs
Backflushing can be effective in controlled environments, but it often fails in high-mix, low-volume operations where actual material usage varies. Instead of relying on standard quantities, consider real-time consumption capture on the shop floor through MES or scanning technology.
6. Give Operators Easy-to-Use Digital Tools
Operators should not have to navigate multiple screens in Business Central to report consumption or output. When tools are complicated, operators avoid using them or rely on memory. An MES like MV2 provides:
• Simple interfaces
• Clear workflows
• Large touch-friendly buttons
• Automatic data validation
This improves accuracy and speeds up training.
7. Strengthen Warehouse and Production Collaboration
Inventory accuracy improves dramatically when warehouse teams and production staff share visibility into:
• WIP status
• Material shortages
• Production progress
• Current location of inventory
When both sides see the same real-time data, issues are resolved faster and discrepancies shrink.
How MES Improves Cycle Counting in Business Central
The most effective way to improve inventory accuracy in Business Central is to connect the shop floor directly to the ERP. MES systems like MV2 are designed specifically to eliminate the manual processes that cause inaccuracies.
Here is how MES strengthens cycle counting:
Real-Time Consumption Posting
Operators scan or report materials as they use them, and the MES immediately syncs with Business Central.
Accurate Output Reporting
Finished goods and WIP are posted instantly, preventing the buildup of unreported inventory.
Scrap and Variance Tracking
Every piece of scrap is captured and sent to Business Central with reason codes.
Live WIP Visibility
Supervisors can see exactly where materials are, what stage they are in, and whether inventory counts should be adjusted.
Automated Workflows
MES automates the majority of transactions that normally cause discrepancies.
Audit Trails for Confidence
Every transaction is logged, providing a clear trail that supports cycle counts, physical inventory, and audits.
The Business Impact of Strong Inventory Accuracy
When cycle counting and shop floor reporting align, manufacturers experience measurable gains:
Higher On-Time Delivery
Production schedules are more accurate when BOMs and inventory levels are reliable.
Lower Inventory Carrying Costs
Companies can reduce safety stock because they trust their numbers.
Fewer Production Disruptions
Material shortages are caught early and resolved before they slow production.
Improved Financial Reporting
Inventory valuation becomes cleaner and more predictable.
Better Customer Satisfaction
Accurate shipments, fewer delays, and improved quality contribute to stronger customer relationships.
Choosing the Right Tools to Improve Inventory Accuracy
Business Central provides strong ERP functionality, but its accuracy depends on consistent and timely data entry from the shop floor. Manufacturers need to consider:
• The complexity of their production environment
• Operator adoption and ease of use
• Integration requirements
• Real-time visibility needs
• Long-term scalability
Conclusion: Cycle Counting in Business Central Depends on Real-Time Shop Floor Data
Inventory accuracy is not just a warehouse function. It is a collaboration between production, material handling, planning, and the ERP system that supports them. When manufacturers connect the shop floor to Business Central through real-time MES functionality, cycle counting becomes easier, more accurate, and more reliable.
Strengthening cycle counting in Business Central begins with ensuring that every production transaction is captured and posted accurately. By digitizing shop floor workflows, reducing manual entry, and improving visibility, manufacturers can achieve inventory accuracy that drives efficiency, profitability, and customer satisfaction.
MV2 MES is designed specifically to connect the shop floor with Business Central, creating a reliable, real-time inventory environment that supports accurate cycle counting. You can explore MV2’s capabilities at isteam.com.