Do you have a warehouse, a store, or an inventory location? The time has come to conduct your first physical inventory count but you have no idea where to start? This guide will discuss what to do before, during, and after physical inventory counts.
“Physical inventory is the measurement, weight, volume, and count of items in a company’s inventory. Physical inventory count is the process of physically counting items owned by an establishment”
The timing of your inventory counting process matters a lot. Think critically when (and what time) to schedule your counts, and then plan (way) ahead. When a time has been settled let your employees know, organize a training session, talk them through aspects like how to effectively count and document inventory, inform them on the form of counting that would be used, and train them on how to use the types of equipment involved.
Draw up a map of your store and stock room illustrating where each product is located. It gives an at-a-glance view of your store and makes it easier for you to assign people to specific areas e.g. damaged product areas. You are also able to determine the best way to go about the counting process.
It is advisable not to plunge into the task blind. Label your warehouse, racks, and shelves when you’re doing a physical count of your inventory, mark the boxes in your stockroom, if the products in them aren’t visible. Using inventory tags are a great way to easily keep track of what items have been counted.
While you’re at it, make sure everything is well arranged and orderly. Take a careful look around the store or stockroom and keep an eye out for items that aren’t in their proper place. Be sure to correct these issues before you begin counting.
It is best not to assign your inventory counts to just any employee. The group conducting your inventory count should consist of seasoned employees as well as those who can provide fresh eyes.
You’ll need experienced team members, as these employees would be more familiar with your policies and the location of different items. However, an employee who is so used to your store or stockroom may overlook small issues and details, so having people who are a bit new to the team may be beneficial.
Conventionally, physical inventory counts are done with a pen and paper. Employees would use a count sheet to tally up the products and reconcile the data in their system.
While this method can get the job done, it’s highly inefficient and it requires a double entry. However, If you use a POS or Inventory management software you can automatically update your inventory levels in real-time. Connect your physical store POS systems, and warehouses for inventory to be updated as and when each sale is made or new stock order booked in.
Other technologies you should consider are:
Handheld Terminals – Handheld mobile scanning devices are versatile and make counting inventory a breeze. The device allows you to do full and partial inventory counts, just scan your product barcodes using your device and will automatically save and record all the necessary product information.
The device is configured to sync with your Omega/ICG account, so once you’re done counting, you can easily update your stock levels.
RFID (Radio Frequency Identification) – Embeding RI chips into the packaging of your products so you can easily track their location. It is practical and convenient for loss prevention and inventory accuracy.
Remember that taking a physical count of inventory tends to be a gruesome task for all involved, Your team could be there for a while and endlessly counting and verifying numbers over and over is an exhausting task, water, drinks, and food will go a long way in keeping your employees happy and efficient.
As we highlighted in the previous article circle counting is an alternative to doing physical inventory, it is a procedure that involves continuous counting of inventory on a rotation basis, Unlike physical counts that cause a total shutdown of the store 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, employees can count over a particular period. Inventory management software typically has a cycle count capabilities making inventory audits free of human error. The use of barcode scanners for cycle counts adds efficiency to your physical inventory checks. This eliminates messy paperwork and allows your employees to complete their weekly quotas quickly and accurately.
You have come a long way, take a deep breath and exhale. Here are some other steps you can take when you are done taking physical inventory.
Doing so will enable you to analyze the data and see what you can do to improve your business. Reports should be straight from your POS or retail management software, all you need to is generate the report and study the data for actionable insight
Once you completed multiple inventory counts over a while it’s beneficial to examine those reports so you can spot patterns. This will help you figure out if discrepancies are taking place, so you can take preventive action for the future.
If you encounter discrepancies take immediate action to get to the root of the issues. Discrepancies can often be traced back to human error, bad calculations, or missing paperwork. In such cases, you’ll need to tighten up your processes. Document your procedures and minimize mistakes. If you are manually entering products into your system, use a barcode scanner instead or CSV file. Sometimes, inventory discrepancies are caused by mischievous reasons. It could be a case of theft or fraud in your store, in which case you’ll have to thoroughly investigate and take steps to prevent and ultimately stop those issues.
Whether you are doing a manual input or using a retail solution, taking a physical count of inventory is a strenuous task. It is however essential to the overall success of your business. Making sure you are hands-on as regards your inventory is needed to improve customers’ experience, make an informed decision about the business. If you intend to do a physical inventory count soon, we can provide you with tools necessary to help you have a seamless count. If you have questions and comments, contact us below or reach us through our social media platforms @posshoptd (Facebook, Instagram, LinkedIn, and Twitter).
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