Physical Inventory 101: Guide To Counting Physical Inventory

Organizations can conserve major repair dollars through proactive maintenance by avoiding unnecessary breakdowns. With Asset Infinity’s auto-schedule feature, an organization can stay assured of their timely servicing schedule so that breakdown time is ruled out. The system automatically assigns ticket based on the type, location or asset selected. Once your request is submitted, a fulfillment expert will get back to you within 1-2 business days. For starters, employees responsible for stocktake should know about training dates, when to work extra shifts and how to perform a count. In this blog, we’ll unpack the concept, significance, and various methods of Physical Inventory Count, laying the foundation for an in-depth exploration of its complexities.

Ad hoc counting

Retail teams count all of the inventory in their store and start the new year off with an accurate record that includes the total cost of goods sold and retail value of their merchandise. There aren’t many items to count, and it likely wouldn’t take up too much of your time. With random sample cycle counting, items are chosen at random for each count, giving a broader view of inventory levels.

Objectives of Physical Asset Management

• Since many brands don’t have the bandwidth to conduct manual inventory counts, electronic counting is becoming norm and replacing traditional inventory management methods.
• A Magento POS (point of sale) system can be seamlessly integrated with your Magento website(s) to synchronize data between your online and offline stores, streamlining retail operations.
• However, it does require performing counts more often and will not give you insight into your full inventory numbers.
• The example chart below shows one physical inventory count, lasting three days.

This method involves scanning the barcodes of items in the inventory, which are then automatically updated in the system, thereby reducing the scope for human error and increasing the speed of the counting process. Physical inventory counts aid in maintaining accurate and up-to-date inventory records. It allows for more accurate forecasting of sales and purchases, making sure that the appropriate amount of product is accessible when needed. Some large retailers do it once a year, while small shops do it even more often. For example, if you have perishable items, you may conduct a daily inventory check to avoid damage.

Full inventory counting

Explain how to record the figures—either manually with a pen and paper, with a spreadsheet, or with a bar code scanner and mobile POS—and show staff how to add notes if an item is faulty, damaged, or missing a tag. With a good inventory management system and warehouse management system, you can keep an eye on inventory turnover more easily. By doing that, you can invest enough in inventory to meet demand without overstocking or understocking. Failing to track physical inventory levels can result in carrying too much (or not enough) inventory, which has the potential to cause budgeting issues.

• Finished goods are categorized by SKUs and deemed ready to sell to the end user once they’ve been received by the manufacture or supplier and stored until items are ready to be picked, packed, or kitted.
• Implementing an asset tracking system can significantly reduce the risk of assets getting lost, stolen, or misplaced.
• Raw materials (also called production inventory) are unprocessed materials or primary commodities that a manufacturer uses to produce finished products.
• To implement cycle counting, HappyMe Retail sets up a schedule for counting different inventory sections.

In this article, we will discover various aspects of physical inventory count, its best practices and tips, and how it helps maintain accurate account records. While physical inventory count is time-consuming and cumbersome, it’s essential to the success of any retailer. You can consider equipping a modern inventory management system as a long-term investment. It can ease your physical inventory counting process with automatic counting reminders, eliminate manual tasks, provide optimal inventory levels, and better inventory forecasting. From there, you can improve quality assurance and higher customer satisfaction rates. By arranging inventory items systematically, businesses can ensure that all items are properly accounted for during physical inventory, reducing the risk of miscounts and inaccuracies.

Address discrepancies immediately

These challenges can result in significant financial losses for businesses, as they may experience difficulty in accurately valuing their stock and fulfilling customer demands. Human error, for instance, can lead to miscounts, while misplaced items often go unnoticed until the inventory is reconciled. Preparing the necessary equipment and supplies for physical inventory is vital for seamless inventory count, management, control, observation, adjustment, and adherence to internal control procedures. This training equips employees with the knowledge and skills to accurately count and record inventory, detect discrepancies, and follow established protocols. It also emphasizes the importance of thorough documentation and adherence to best practices for maintaining accurate stock levels.

This includes selecting a date and time, assigning staff to participate in the count, and ensuring that all necessary equipment is available. To implement cycle counting, HappyMe Retail sets up a schedule for counting what is a physical inventory different inventory sections. For example, the company may count all the t-shirts in the store in one week, while the next week, it may count all the shoes. The counting is done during business hours, and the inventory is organized so that it is easy to count and track. Losing inventory, or stock shrinkage, is a common and frustrating problem for retailers.

According to a recent study, an out-of-stock product was the biggest reason for a customer’s decision to leave a store empty-handed. Track assets, schedule maintenance, prevent losses, and enhance guest satisfaction with real-time insights. Explore Asset Infinity today and take the first step towards transforming your physical asset management strategy into a powerful driver of success.

We’ll e-mail you our Free Special Report and keep you posted on how APS can help you save time and money with your product fulfillment with our free e-letter, Fulfillment Best Practices, sent to your inbox regularly. A Magento POS (point of sale) system can be seamlessly integrated with your Magento website(s) to synchronize data between your online and offline stores, streamlining retail operations. Most of our customers say Magento is speedy and more customizable than others; it is suitable for medium and large enterprises or fast-growing businesses with complex requirements/customizations. By knowing exactly what’s on your shelves, you can more accurately predict how much of a product you’ll need, how quickly it’ll sell, and when to restock.

How Do You Perform a Physical Inventory Count?

Doing this weekly will give you enough time to identify what caused the shrinkage and reconcile it. The goal of a physical inventory count is to audit in-store inventory levels and ensure that the inventory numbers recorded in your POS system are as close to 100% accurate as possible. The measure of your inventory levels’ accuracy is your shrinkage rate, which is the percentage of inventory missing from your POS records. Inventory management keeps track of the stock that a company buys, sells, or stores in its warehouses and stores. It focuses on managing goods that are meant to be sold or used in the production process. On the other hand, asset management focuses on tracking the equipment, tools, and other resources that a company uses to operate its business.

Asset Infinity includes RFID and barcode capabilities to provide smooth asset management. Asset Infinity, being a complete platform, also provides features such as asset tracking, maintenance scheduling, and performance analytics, and hence becomes unavoidable for businesses. Incorporation of an efficient physical asset management strategy proves very beneficial, so that companies compete in their sectors without any hurdle.

Learn everything you need to know about performing physical counting inventories, including the steps, methods, process, planning and benefits. Plus, expert advice, calendars and metrics to help you become an inventory pro. Physical inventory count could be a long and monotonous process, especially when you have large amounts of stock in your warehouse. Remember to keep your staff well-fed and hydrated, with regular breaks to recharge their body batteries. Ad hoc counting, also known as spot or blind counting, refers to inventory counts which are unscheduled and unplanned. While this type of inventory count has the benefits of being thorough and accurate, it’s often time-consuming and labor-intensive, requiring an operational shutdown during the count.

After the count is complete, it’s essential to compile and review the results to ensure accuracy. Compare counts from different employees, especially if two people counted the same inventory, to confirm consistency. Ensure that all staff involved in the inventory count understand the process and the importance of accuracy. Provide clear instructions on the type of stock check being conducted and where to record the results. Still, you can speed up the process by focusing on smaller sections of your inventory (this is called a cycle count or partial inventory count). Not only do they help you get a clear and accurate picture of your inventory, but they can also significantly cut down on inventory carrying costs, which research shows can reach 30-60% of your inventory’s value.