By meticulously documenting the inventory counting processes and results, businesses can demonstrate their commitment to accuracy, transparency, and meeting regulatory requirements. By reconciling the physical count with recorded inventory levels, businesses can pinpoint any unaccounted-for discrepancies, shedding light on areas where pilferage or damage may have occurred. TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch.

Evaluate Apps and Software

You must schedule staff training to ensure accuracy and consistency during the physical inventory count. Training should cover the inventory count procedures, the equipment used, and specific protocols or guidelines. Creating a comprehensive inventory item list is a vital step in conducting a successful physical inventory count. Physical inventory counts offer essential data for demand forecasting, production planning, and setting optimal reorder points.

Major Purposes of Conducting Physical Inventory Count

• This helps you uncover inventory issues in a timely manner, hence ensuring accounting accuracy.
• By storing data in the cloud, businesses can access their inventory information from anywhere, at any time.
• This is especially useful for companies with multiple locations or remote teams.
• Full counting involves a total review of all goods in your warehouse or store.
• Count teams typically consist of two individuals – one who counts and the other who records.
• Counting too frequently is unproductive and will produce similar results, but counting too infrequently increases the chances of missing critical information.

Raw materials (also called production inventory) are unprocessed materials or primary commodities that a manufacturer uses to produce finished products. A physical count also gives management insight into how much product they need to replenish or if more must be ordered from suppliers. The most common practice is random sampling, in which every item has an equal chance of being selected. Other methods include systematic sampling, where items are chosen based on a specific pattern, and stratified sampling, where items are divided into categories and samples are taken from each type. This procedure avoids counting every item in an inventory, which can be time-consuming and costly. Finally, review your inventory regularly and make changes based on what’s selling and not.

For Medium & Large Businesses

Inventory cleaning can help ensure the stock count is accurate, decreasing the likelihood of mistakes or inconsistencies. Counting inventory too frequently may yield similar outcomes without substantial benefits, while infrequent physical inventory procedures counting increases the risk of crucial information being overlooked. Each scanned item updates the inventory level electronically, minimizing the risk of over or under-counting. As you perform a count, fill out inventory tags with the relevant information.

• Physical inventory methods play a pivotal role in ensuring that stock levels are correctly recorded and managed.
• Implementing these best practices can streamline your inventory management process and gain better control over your stock levels.
• There are several solutions on the market with different types of capabilities based on your needs, including multichannel inventory management.
• Give them a sample of a completed form, then have them go over their initial try to ensure the form was filled out correctly.
• Depending on the method used for recording markdowns, consideration may need to be given to the price recorded on unsold merchandise.

Companies may undertake cycle counting as frequently as daily, and it is recommended that it be performed at least quarterly. Assigning inventory responsibility to designated individuals or teams is essential for a successful physical inventory count. This comprehensive counting process enables retail teams to establish an accurate record for the new year, encompassing the total cost of goods sold and the retail value of the merchandise. Check whether your inventory management software supports physical asset tracking, such as with a barcode scanner.

Get Set and Go Counting

Be sure to schedule enough people and enough time to take the count and complete the count audits. Frequent and required breaks should be considered to make sure everyone stays fresh and alert. In fact, rotating teams can be ideal so no one person is overwhelmed or overly relied on for results. Before the count begins, and until the initial count audit, all inventory transactions and movements should cease. Physical counts should only occur when the store is closed so sales aren’t occurring and inventory isn’t being moved for customers or vendors.

However, pushing all your inventory control procedures into a single event requires much time and resources. On the other hand, regular inventory checks can keep your stock information updated and reduce inventory carrying costs. The article will explain the concept and how you can improve your physical inventory counting procedures.

Customer relations will be good because you can quickly ship required quantity of products to them. You will also have better control of your stock levels and company’s money; you will be able to order the goods in the right quantity at the proper time avoiding over- or understock. So the goal of the annual inventory count is to obtain accurate information about inventories on hand, which will help you to make right business decision.

Finally, it’s also possible that an audit may require a physical count of items to verify that accurate records are being kept. Following are the few benefits of the cycle count method over annual physical inventory. The best-suited alternative to this procedure is the inventory cycle count, where the materials are checked on a specific day for a particular location. But, again, ABC analysis can be utilized here to make counting more efficient and reliable. You can use a few methods and procedures for annual physical inventory, so choosing the right approach for your business is essential. Another benefit of physically counting your inventory is to ensure you understand and can plan for loss.