Some stores do it once a year, others conduct it on a bi-annual basis, while other stores do it more often. Make sure they can make themselves available on the decided date. Touch base with your team and let them know in advance when you plan to conduct the count and at which locations so they can prepare the products and minimize stock movements on the day that the count occurs. Whatever the case, regular messages and reminders will pave the way for a smooth stock taking experience.
Draw up a map of your store and stock room that illustrates where your products are located. Doing so will give an at-a-glance view of your store and make it easier for you to assign people to each section so you can determine the best way to go about the counting process i.
Those loose boxes and stray pallets without a home are often the problems that come back to haunt you while you try to reconcile. Even if you must make new, temporary locations for the duration of the count, put everything in a well-marked and defined place, and leave it there.
Are there tank tops lurking in footwear section? Did someone mislabel a box of merchandise? Be sure to correct these issues before you begin counting. These could include merchandise in transit — such as outstanding orders from suppliers or products that have been returned. Ideally, these items should be processed and dealt with before performing the count to avoid any confusion later on.
Ditto for faulty products. If you encounter damaged items before the count takes place, deal with them early on. See to it that your team is familiar with all of the steps you took above. If you created a map, show it to them and ensure they know where people are assigned. Did you change the position of certain items or re-labeled boxes and sections? Tell them—or better yet, show them.
Take a walk with them on the sales floor or stock room so they can familiarize themselves with everything. This will make the task of actually counting and reconciling much easier. Water, sodas, and a few boxes of pizza will go a long way in keeping your employees happy and efficient.
Physically counting inventory is a tedious process, so you want your team to stay on top of their game. Keeping them well-fed and watered helps them do just that. Finished counting your stock? Take immediate steps to improve your inventory accuracy. And the time to do this is right after you complete your inventory count. The information needs to be fresh in your mind, so avoid postponing your inventory checks and audits.
Pull up inventory reports — Doing so will enable you to analyze the data and see what you can do to improve your business. This task should be straightforward if your POS or retail management system has reporting and retail analytics capabilities. Just generate the right reports and study the data for actionable insights. Pinpoint high-risk zones — Use your inventory reports to identify high-risk zones or regions in your stores.
Tell your staff about these high-risk areas and figure out how you can minimize losses in those regions. This will help you figure out why losses or discrepancies are taking place, so you can take preventive action for the future. Comparing past reports with current ones will also help you see if your inventory practices are working. Are discrepancies decreasing over time or not?
Whatever the case, the only to find out is to compare the data. If you encounter discrepancies take immediate action to get to the root of the issues. As we mentioned in our post on inventory reconciliation , discrepancies can often be traced back to human error, bad math, or missing paperwork.
Document your procedures and automate various steps to minimize mistakes. Sometimes, inventory discrepancies are caused by more sinister reasons. Keeping track of your inventory data ideally using retail reporting software also helps a ton. If you intend to do physical inventory counts anytime soon, be sure to complete the tasks we talked about above.
Doing so will make your life so much easier. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest , a free eBook to help retailers future-proof their stores. A strong recommendation for most retailers is farm it out to an inventory company. They can do the job in general cheaper and faster than associates at the store level.
Get better results with an outside service. Great point, Emery. Hiring a third party that specializes in inventory counts could be a cost-effective and time-saving option for retailers. Have you ever dealt with such services? Here are a few more reasons why performing a physical inventory count is so important:.
An annual physical inventory count is usually required for tax purposes. You can also record your losses to lessen your tax burden. Shrinkage control. Physical inventory counts help you identify shrinkage problems. Units may be missing from your inventory for any number of reasons, but the most common causes are loss, damage, and theft. Informed decision making. With accurate, up-to-date information about your inventory, you'll be able to make informed decisions when working with wholesalers and vendors.
Without accurate stock information, effective inventory control is impossible. An accurate inventory management system helps your staff save time and serve their customers better. Instead of having to check the stock room to see if a product is available, they can trust their system's inventory data and focus on serving the client. Companies without inventory software tend to use either an inventory tracking spreadsheet or an inventory count sheet. In fact, some software pull inventory counts from Excel spreadsheets via uploads.
Once the data is uploaded and synced, processes are automatic. Gone are the days of manual data entry and tally counts. Users can do a quick search within the software to find the location of items based on barcode labels or SKU numbers. SkuVault, for example, recommends that clients who use Excel initially upload their quantities that way first, and then let SkuVault use the audit feature after to count item locations.
Auditing locations allows user to recount items in a location by replacing the previous items with newly scanned items and quantities. From this point on physical inventory counts are automatic. Pretty cool, huh? Some users have concerns over potential sales between the time of initial counting and the finished process. It also helps users track what was ordered which creates pending quantities in SkuVault. This creates an equilibrium for the time in-between, which could take anywhere from weeks to a do a complete physical inventory count.
Any process is performed best when plenty of preparation time is set in place. This is an age old tale. Due to the possible magnitude of a physical inventory count, some things need to be planned ahead of time. In the case of special or segregated areas in the warehouse, the following are examples of areas that should be counted in the physical inventory counts:. Some areas that should not be counted and are considered discrepancies include:. Take a deep breath and exhale.
The alternative, or supplement, to taking a physical count of inventory is to conduct cycle counts. Cycle counts is an inventory auditing procedure where a smaller subset of inventory is counted continuously on a rotating basis. Unlike physical counts that cause a total shutdown of production, cycle counts can be performed daily with as little or as much quantity per count desired.
So, instead of counting your entire inventory at once over the period of one to several days or weeks, you could count individual sections of inventory a little each day. Inventory software has cycle count capabilities making inventory audits automatic and free of human error. Periodic inventory is another method of inventory auditing where a physical count of inventory is performed at certain intervals for financial reporting purposes under the asset section of a balance sheet.
Follow-up on this blog in the near future as we will be discussing periodic inventory and perpetual inventory in greater depth. Physical inventory counts are essential for the organization and overall success of a business.
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