Tiring, dull, exhausting, a time-suck. Is there anything good to be said about stock-taking? There sure is. How about “essential”, “puts things to rights”, or “helps your business stay profitable”? Inventory auditing is a crucial yet highly resource-intensive task. But you don’t have to bite the bullet every time you have to do it. With this 5-step checklist, you will be able to implement a systematic approach that makes inventory auditing much less of a drag, if any.
1. What to count
Are you planning to count all of your inventory (physical counting), or will it be only some groups of products (cycle counting)?
Physical inventory involves counting all items in the inventory at once. It is a comprehensive audit of the entire stock and is typically done periodically, such as at the end of a fiscal year or quarter.
During cycle counts, instead of counting the entire inventory at once, specific items or sections are counted at different times according to a predefined schedule. Cycle counts are conducted frequently, often daily, weekly, or monthly, depending on the inventory volume and the importance of the items being counted. Each cycle count covers a small, manageable portion of the stock.
- If you’re using spreadsheets, you could sort products by category/name/vendor and highlight the groups you need to audit.
- Walk around the warehouse and attach counting labels to the selected items.
With automated inventory control software, you’re likely to have the ability to set up product categories. When starting a new inventory count, enter the category name and add all related items. What could further accelerate the process is bin location tracking - kudos to your inventory system if it has one.
2. Where to count
The spread of goods might make the job of inventory counting particularly difficult.
- Are you auditing the main warehouse, remote, or mobile locations (trucks)? Everyone involved must get a clear schedule and instructions.
- Nothing must be coming in or going out during stock-taking. Ensure no one is selling or receiving anything right while others are taking stock.
With a warehouse and inventory management system, it’s easier to isolate groups of products for an upcoming stock-take without disrupting day-to-day operations within or beyond the warehouse. If your employees are using an inventory mobile app, their mobile devices will have been assigned to a certain location already and won’t affect inventory from other locations. The counting results will have to be approved by a manager first before going live in the app. Manager approval is vital as it gives a buffer time to spot any inconsistencies. Skipping the verification of counted numbers against recorded quantities can result in unresolved discrepancies.
3. When to count
Ideally, stock-taking should take place:
- During off-peak hours
- During low-activity periods like after hours or weekends or seasonal slowdowns
- Before financial audits
- Before major sales promotions
- Monthly or bi-monthly. For businesses with a high turnover - weekly or bi-weekly
- Before or after starting to use a new inventory management system
Inventory counting systems give you more flexibility as to when to take stock. Thanks to barcode scanning, inventory counts take at least twice as little as manual counting. Cycle counts for small groups of products hardly require any freeze of warehouse activities and could take minutes instead of hours.
4. Analyze the post-count results
- Match the physical count numbers with your inventory records. Note any differences and investigate the causes.
- If discrepancies are found, adjust your inventory records to reflect the accurate counts. This may involve updating quantities, correcting locations, or noting lost or damaged items.
- Look for patterns in discrepancies to identify potential issues in your inventory management process. Common causes include data entry errors, theft, or supplier issues.
- Most importantly, you need to know the total value of added or written-off items for accounting purposes, as well as for better purchasing planning.
One of the best things about inventory counting apps is that anything is traceable there. An operator’s rooky mistake? Wrong items on a purchase order? Sold more than was available? Unaccounted for quantity adjustments? You can rewind the transaction a few steps back and quickly untangle the mess.
5. Push updates to QuickBooks
Enter the new quantities in your QuickBooks and document adjustment reasons. Though time-consuming, it’s a pretty straightforward process. Also, there’s always a risk of giving QuickBooks wrong numbers, which of course compromises the reliability of your entire inventory data.
Thanks to the two-way integration with QuickBooks, you can rest assured your inventory data is in both systems without you spending a single minute on it. It’s a good practice to make all inventory, purchasing, and sales entries in your inventory app while letting QuickBooks handle your accounting. Otherwise, you might have to deal with inconsistencies that would take longer to trace back and reconcile.
Counting inventory across multiple locations
Counting inventory across multiple warehouses can be a complex task, but it can be managed effectively with proper planning and organization. Stick to these three practices when carrying out stock-taking across severa storage locations:
1. Standardize procedures
Develop standardized procedures for inventory counting that apply to all warehouses. This ensures consistency and accuracy across locations. Ensure that all staff involved in the counting process are trained on these procedures and understand their roles and responsibilities.
2. Use Technology
Utilize inventory management software that can track inventory across multiple locations in real-time. This software can help coordinate and synchronize the counting process. Implement barcode technology to streamline the counting process and reduce human error.
3. Plan and Schedule
Schedule the inventory counts at each warehouse, ensuring that they are done at a time that minimizes disruption to regular operations.Implement cycle counting where a subset of inventory is counted on a regular basis instead of a full physical count. This can be rotated across different warehouses.
Implementing a systematic approach to inventory counting is essential for maintaining accurate inventory records and ensuring the smooth operation of your business. By following this 5-step inventory counting checklist, you can streamline your inventory management practices, reduce discrepancies, and make informed decisions based on accurate data. Regularly reviewing and improving your inventory counting process will help in maintaining high levels of accuracy and efficiency, ultimately contributing to the overall success of your business. Reduce human errors and maximize your employees’ time with HandiFox.
