With accurate knowledge about stock movements and stock on hand, you can make informed decisions about theft/shrinkage, slow-moving items, damaged stock, technological discrepancies and warehouse processes which will all lead to increases in your bottom line.
Here are our 7 Golden rules for counting inventory!
1. Know WHY you need to count your inventory
A few of the main reasons are to update your POS (point of sale) system with stock levels, to identify shrinkage, to identify opportunities to increase your profit margins, and for year end accounting purposes.
2. Know WHAT is to be counted, WHEN and by WHOM
Determine if all stock needs to be counted at the same time. For example, if there is a storage area for seasonal stock, then can this be pre-counted? The more areas that can be pre-counted in advance the better as this will result in a significant reduction in time on the day of your inventory count.
Have all key personnel available on the day so they can be responsible for the counting in their own areas.
3. Be prepared
Straighten the items on the shelf, sort like-with-like products and clean the areas to be counted prior to beginning the inventory count. Remove excessive cardboard boxes, have all full cases on the bottom and the open one on the top, pre-count large cases of smaller items and have the quantity written on the outside of the box.
4. Know what equipment you need
Hand held scanners – For bar-coded inventory. Do you own them? Have to rent them? Are they all working? Do they have the latest version of software?
Equipment – Ladders lifts, small steps for slightly out of reach areas, gloves for counting fridges or freezers, paper and a printer for printing count sheets. Access to the barcode printer
Trained Stocktakers – Untrained stocktakers may not fully understand the process.
Supervisors – To spot check certain areas to ensure maximum accuracy.
5. Inform your team
Part of your plan requires people that can count accurately. Tell them the importance of the count, what they will be counting, potential problems, when break time are likely to take place etc. Keep them in the communications loop and have a plan as to how things will go.
Discourage radios, mobile phones, earphones and idle chit chat while the count is in progress. Distractions can easily lead to errors. Errors lead to inaccurate reports, thus undermining the whole effort of the inventory audit.
6. Undertake rechecks
Vitally important. We are all human and we all make mistakes. Have a rechecking procedure in place so as rechecks are undertaken while the inventory audit is in progress. Do not leave staff to it by themselves as mistakes are likely to result in costly and time consuming problems down the road which little chance of recourse. This accountability recheck will make a huge difference to the accuracy of the inventory count.
7. Compare results
Going back to the original point of knowing why you wanted a count of all inventory in the first place, is now ensuring that you have fulfilled this need.
Have you?
- Counted accurately and do you have confidence in the count?
- Accurately identify shrinkage?
- Updated your POS?
