With These Tips, Inventory Reconciliation Can Be Simpler and More Fun
As we’ve mentioned before, it’s important to get a clear picture of how much inventory you really have in your store, warehouse, or stockroom.
Inaccurate inventory counts can affect your taxes and insurance. They can also lead to increased stock-outs, which lead to their own expenses. Failing to count inventory properly could also lead you to miss serious, expensive problems that drain revenue over time, such as theft or problematic storage techniques. Plus, when your staff feels confident about what’s actually in stock, they can speed up their work and stop double-checking whether a certain item is really in stock like the system says.
However, manual inventory counts can be time-consuming, tedious, and expensive in their own right. Full counts require significant staffing, and may also require closing your business down for hours or even a full day.
It’s no wonder that many small- and medium-sized businesses tend to avoid or procrastinate on inventory reconciliation.
However, with a little foresight and planning, the task will be much easier — and maybe even a little bit fun. Here are several steps to take.
The most important thing you can do to make a full inventory count run smoothly is to get everything as organized as possible before you start it.
You should have a clear idea of exactly where all of your products are in the store, and how much each product costs. Everything should be labeled clearly, and each product should be consolidated with the rest of its type (not in multiple spots throughout the store).
Self-proclaimed “retail doctor” Bob Phibbs had some great suggestions on his blog about making an actual map of your store in preparation for manual inventory. He suggests sketching out the location of “every rack, display, wall, and shelf,” including the back room and storage area, on an oversize piece of paper. Then, you can use the map to divide the store into numerous sections for counting purposes.
(By the way, if you want to stay more consistently organized, it can help to count certain types of inventory more frequently in between full counts. Spot checking and cycle counting can make the task of full stock counts much more manageable. For more on these options, check out our post: Which of These Inventory Reconciliation Techniques is Best for Your Business?)
Select Great Staff
Appoint a point person for the project and designate responsibilities ahead of time as much as you can to minimize the time needed for the actual count. Choose someone with great people skills who can bring some energy and enthusiasm to the task. A good leader will make the job run more smoothly.
As far as counting the inventory, you have several staffing options.
Of course, you can have existing employees handle it. They’re already familiar with the store and the inventory, which can be very helpful. Tackling this job can also present a good opportunity for leadership. But being over-familiar with the inventory may make them miss things that someone with fresh eyes might notice.
Also, assigning those typically in charge of handling a certain type of stock also to reconcile that same stock can be problematic. They might be likely to make assumptions about what’s there, or fudge inventory numbers to cover up theft or mismanagement.
For these reasons and others, some companies choose to totally outsource the job to professional inventory counting services. Specialists can be particularly helpful if you’re new to the process of the manual inventory count, or if you have little experience with the process. Consult with multiple companies to assess their techniques before you make a final decision.
Another option, as Phibbs suggests, is to supplement your existing staff with students who want some quick cash. Temps or contractors can also be an affordable option. Just make sure you’re in compliance with all local labor laws and don’t forget to get the event covered with liability insurance.
Finally, consider having the counters work in pairs. Pairs can help counters stay accountable and move more quickly and build a sense of teamwork. You can pair those who are more familiar with the stock and with those who are less experienced.
Choose the Best Date
Assess which day counting is easiest for your company. Most companies choose to count inventory whenever it will be the lowest, such as right after the holidays. If you can, minimize inventory further by pausing new inbound orders or sending out pending shipments.
Choose a date well in advance, especially if the inventory event will affect your operating hours. Let customers know as soon as you can to avoid confusion or disappointment when they show up and see your business is closed. Note the upcoming change with a sign on the door and notices on your website, phone answering service, and social media pages.
Prepare Materials and Procedures Carefully
Carefully prepare the counting sheets with categories, prices, and, if necessary, descriptions. If you’re using paper sheets, make sure to have extra. Always use pencils with erasers to accommodate for mistakes. If you’re using software (we’ll discuss more about this in the next section), make sure that you have the appropriate hardware ready and that the relevant product information has been updated in the inventory software.
Decide how you’ll train the counters to indicate their progress, too. This retail blogger suggests using clear visual cues such as large tags in bright colors to keep track of which items have been counted and which haven’t.
Keep the store and stock area clean and well-lit to make it more inviting. Finally, plan to have food, drinks, and music on hand to make what can be a stressful event a little more fun.
Leverage Software Tools to Make the Job Easier
The paper-and-pencil method might be the simplest option for counting inventory, but it’s certainly not the best.
Many modern POS systems and inventory management software programs come with inventory counting features that can make stock counts faster and more accurate.
With these new systems, employees can use barcode scanners, SKU lookup, or other hardware to count stock easily. (For example, some programs can turn any smart device into a scanner with the use of an app.) The stock counts are then updated in the software in real time from multiple devices as your counters make their way through the stockroom — no more manual input of totals from paper sheets necessary.
Plus, software options can produce really helpful reports right away, such as variance reports that show the discrepancies between what was counted and what was expected. Cloud-based software can even send the inventory data directly to your accounting system when a stock take is officially finished.
If you’d rather do your count offline, you can still do it via spreadsheet. The system will continue to adjust to account for real-time changes, and you can upload the final count when you’re ready.
There are many inventory systems on the market these days, and finding the right one for your business can be daunting. If you’re wondering which one will be the best choice for your company, contact us at Cloudscape Technologies for a free consultation. We are certified partners for both Vend and Unleashed, two of the best cloud-based inventory systems on the market. Our personalized services empower business owners to choose powerful, integrated software solutions that handle not just inventory, but POS, marketing, HR, and more.