How to Take Physical Inventory

As the retail industry continues to grow, maintaining a good stock of your products is crucial for success. Having enough supplies on hand keeps both customers and employees happy. And the best way to keep track of your on-hand items is with thorough inventory counts. With the right inventory strategy, you avoid product shortages and ensure inventory accuracy.

Physical inventory counts consist of counting your in-store products in person. Using a mobile device or pen and paper, employees count each product and record tallies manually. But sometimes, this procedure is tiresome or stressful for employees. Abiding by a detailed plan lets you and your employees complete counts without added stress.

Here is a basic overview of how to take physical inventory.

Steps for Taking Physical Inventory

Following a thorough blueprint for physical counts of inventory helps ensure correct completion. Without a plan, you might miss an item or go over your time estimates. And, having a solid checklist is a great way to keep employees motivated and on task.

Here are six steps to follow for taking physical inventory.

1. Plan Ahead

The most thorough inventory counts are planned in advance. Depending on the size of your business, taking stock of your inventory could take weeks. And in many cases, you have to take counts outside of regular business hours. Plan ahead for your physical inventory with these recommendations:

• Pick the best date: The most crucial first step is selecting a time for your inventory count. Be sure to plan for dates that suit your employees well. When in doubt, organize more time than needed. That way, if you run over initial time estimates, you can still stay on track.
• Communicate with everyone: Notify your employees and other necessary third parties of your upcoming inventory date. If possible, tell them about the time weeks in advance so they can plan for it. You could also postpone deliveries around that time so they won’t interfere with your count.
• Review current inventory: Before the big day, take time to inspect how the stock currently stands. Check that the items are in the right condition and not missing any vital information. Complete any last-minute labels to make your products ready for counting.

2. Map Out Your Floor

Next, you should create a map of the inventory floor. Whether you use a preexisting blueprint or draw your pictures, provide employees with an overview of the stockroom and what they need to count. Make sure to label all shelves, racks and displays so that workers avoid any confusion during the process.

It’s also a good idea to create categories at this stage. Group your items by product type to make them easier to keep track of. For instance, you might separate products by shirts or shoes if you run a clothing store. Be sure to identify the categories’ locations on the according map.

3. Train Your Employees

You want to make sure your employees complete the inventory correctly. If not, you receive inaccurate data and lose precious time. To combat this, give your employees high-quality training. Before the inventory date, you should provide employees with a thorough explanation of how to complete their counts. Give them a demonstration or time for a practice run. Try creating a detailed list of the process so employees can refer to it during counting.

4. Count

When the inventory date arrives, you can begin counting. Many companies use a pairing method, where two employees work together to complete the job. One worker takes a physical count of the items, while the other tags the products with information like location, description and quantity. Make your way through your stock, and be sure to account for all categories. Have a supervisor nearby for any questions or concerns during the counts.

5. Recount

Once you complete your initial inventory, you should recount a few sections to check for inaccuracies. Recounts can be completed a few days after the first logged inventories. If you find discrepancies between your tallies and the recorded tallies, it’s best to perform a complete recount of all sections.

You can also appoint a data entry team at this stage to look over the inventory results. They can check for errors in the data and alert you as needed.

6. Analyze Your Reports

After your count and recount, it’s finally time to analyze your findings. It’s best to compare your physical inventory counts with already recorded inventory data. If there are disparities between data, it’s time for an action plan. Maintaining inventory accuracy keeps your business in good health and prevents financial implications. So, you should take any discrepancies seriously and plan how you will address these in the future.

Physical Inventory Tips

While physical counts are essential for your business, the process can sometimes seem overwhelming or stressful. Here are more tips for smoothing your inventory counts:

• Try new technologies: Using pen and paper is a trusted inventory method, but it can lead to human error. Try using mobile barcode scanners or inventory management software to streamline your process. These technologies reduce human error and usually speed up the entire count.
• Select trusted staff: Depending on the size of your business, you might not need every employee to help with counts. Try to pick employees with prior experience in inventory or keen attention to detail. That way, you ensure hardworking individuals complete the task and reduce the risks of errors.
• Reward your employees: Inventory can be a draining task, no matter the business. Show your staff your appreciation by providing refreshments or fun music during and after the job.

How Finale Inventory Can Help

Finale Inventory has been a leader in inventory management solutions for years. We collaborate with growing businesses and provide customized inventory systems. Our high-quality system streamlines your inventory processes and analyzes how you can improve.

We offer a cloud-based inventory management system to assist with your physical inventory needs. This online system is cost-effective, secure and efficient. Whether you need help with inventory auditing, managing barcodes or anything in-between, our inventory management program can assist you.

A few more benefits of our cloud-based inventory program include:

• Centralized management: Keep all of your critical information in one secure location with our management capabilities. Our inventory management system allows you to view updates at any time. Or, our warehouse management systems help you track warehouse proceedings, from transfers to audits.
• Purchasing capabilities: Finale Inventory offers high-quality purchasing options to smooth your inventory process. Easily purchase more materials or reorder products with just a simple click. We also offer purchasing analysis, advising you on the best time to reorder for maximum revenue.
• Barcode generation and tracking: Having accurate barcodes is one of the most important inventory components. Our system makes generating barcodes as simple as inputting data and pressing print. You’ll be able to create custom codes with preconfigured labels that you can start using immediately and print a wide range of documents that Finale Inventory can help customize for your business needs.