The most wonderful time of the year is also a time for physical inventories. You may say bah humbug, but be of good cheer! There is no need to dread the year-end physical inventory count if you prepare. What is often perceived as time consuming and disruptive can provide insight into improving operational efficiency.
The inventory count not only gives you a snapshot of how much inventory is on hand, but it also provides reconciliation of a shipper’s book inventory to the warehouse’s book inventory. Where there are stock discrepancies, additional counts and adjustments to the books may be necessary to true-up the inventory. The tricky part in performing the inventory is to capture a moment in time. It’s usually easier to count inventory during off-hours and freeze operations while the count takes place.
The burden of the annual physical count can be lessened by performing routine cycle counts of the inventory throughout the year. With cycle counting, inventory accuracy is evaluated on an ongoing basis and therefore minimizes opportunities for discrepancies and lessens disruption to the operation during the physical count.
Planning is key to performing a quick and thorough physical inventory. Some important steps:
- Segregate any product that is on hold, damaged or unsalable
- Make sure the warehouse is well organized with product separated by item and lot code
- Identify any roadblocks before the count actually begins
- Ensure adequate staff to perform the count as two-person teams may be required
- If necessary, make arrangements for your audit team to be present to observe procedures, review processes and enforce cutoffs, ensure internal controls and perform random counts to validate counts made by employees
Once the physical count is complete, investigating discrepancies between the physical count and your WMS system is necessary. This often leads to developing better methods of stocking items more efficiently and safe guarding against obsolescence.
For more information on how The Shippers Group collaborates with clients to ensure inventory accuracy, contact us here.