Companies that sell products to their clients, namely merchandising and manufacturing companies, typically keep a stock accuracy of their products in their stores and warehouses, ready to be purchased by the customer. This stock of products is named inventory. Inventory may be a big part of a merchandising or manufacturing firm’s asset base.
Because inventory items are constantly moving, from sales, transfers from the stockroom to the shop floor, and new purchases, it’s important to possess good inventory management processes to stay on track. Failure to try to do so will end in inaccurate financial reporting. Counting inventory matches physical inventory available within the company’s physical stores and warehouses to reported inventory within the company’s books.
Warehouse Stock Counting Techniques may be a good way for your rental business to accurately count its stock in the event of loss or theft. It’s crucial to make sure your inventory is up so far. If not, you’ll easily experience sudden equipment shortages, forcing you to look for substitutes or sub-rentals. With this precise count, you’ll assess the effectiveness of your inventory systems and, if not, put new controls or procedures in situ to enhance productivity and lower losses.
Warehouse Stock Counting Techniques
Here, we’ll discuss the method of inventory counting alongside the varied methods of inventory counting.
- Cycle Counting
As the name implies, cycle counting is about counting in cycles. You need to count your full inventory directly, but roll in the hay in parts. A special part of the shop like bin location or warehouse is counted monthly, weekly, or every day.
It is often supported by product types, product groups, and warehouse/store zones. And for every differentiator, you’ll choose different cycle lengths. For instance, small-sized, fast-selling items should be counted more often than large kitchen appliances.
Advantages
- Cycle count could remove the necessity to execute that frightening annual count – which is typical for many companies.
- With the cycle counting method, you’ll distribute the workload throughout the year rather than putting all efforts thereon one weekend.
Challenges
- When not counting everything, there’s always a risk of missing items when creating the counting orders, so planning is critical here.
- As cycle counting might be happening on a day-to-day basis, it’s going to force you to try to do it during open hours. Still, during this scenario, there’s always the likelihood that items included within the counting orders might be sold or shipped before being actually counted.
2. Ad-hoc Counting
Ad hoc counting, also referred to as JIT (Just-In-Time) inventory or blind counting, refers to inventory counts which are unscheduled and unplanned. This inventory counting method usually wants to rectify inventory record inaccuracies observed outside of a counting period. Once the count is complete, they update the knowledge within the WMS(Warehouse Management System).
Advantages
- You have more flexibility with ad-hoc counting to handle emergencies and obtain round the problems with poor cycle count planning.
- Ad-hoc counting analysis and results may enable you to modify your cycle count plan exactly.
Challenges
- If inventory counting isn’t a scheduled, regular event, the data accuracy and timeliness of reports may be improved using the unplanned approach.
3.Tag Counting
In preparation for tag counting, the store/warehouse employees should place a physical append on each item. During counting, the worker must fill in the item ID, count quantity, and other relevant information on the designated spaces on the RFID tags. RFID reader used to gather information from an RFID tag, which is used to track individual objects.
Some tags have two sides so that a second worker may validate the knowledge and, if needed, fill in the correction on the second side. After the counting is processed, these tags are collected and entered into the system as journals.
Advantages
- Tag counting is extremely suitable for stores, where usually there are not any locations sort of a proper warehouse, or for bulk warehouse zones.
Challenges
- Tag counting might only be suitable for some types of companies. Still, if you implement it in your company, then it really is undoubtedly one of the simplest ways for inventory counting, supplying you with transparency, freedom, and accuracy.
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ABC Counting Method
The ABC counting method may be a well-regarded approach that categorizes inventory items into three classes: A, B, and C. Class A represents the things with the very best value, usually contributing significantly to total revenue. In contrast, class B consists of objects with medium value, and sophistication C encompasses those with rock bottom value.
By specializing in the highest-value items, companies can make sure that the foremost critical products are always available. This ABC analysis is right for businesses with a good range of products, like electronics retailers, where specific items may have higher profit margins.
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Usage-Based Counting Method
The Usage-Based counting method emphasizes inventory items accessed, sold, or consumed more frequently. This method tailors inventory management to demand forecasting by concentrating on the movement patterns. It is often particularly suitable for grocery stores, where certain perishable goods may move faster than others.
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Hybrid Counting Method
The Hybrid counting method represents a comprehensive approach by combining the principles of both ABC and Usage-Based methods. It offers a balanced perspective by considering both the worth and frequency of movement. This method might be beneficial for complex businesses with diverse inventory, like multi-category online marketplaces.
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Geographic Counting Method
Geographic counting targets inventory located in specific physical locations within warehouse storage. For instance, a furniture retailer with multiple sections may adopt this method to watch each area thoroughly.
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Opportunity-Based Counting Method
The Opportunity-Based counting method capitalizes on key events within the logistics chain, like receiving new shipments, product returns, or other significant transitions. It enables for timely and real-time inventory counts that align with the natural flow of products. A typical application could be in an e-commerce warehouse where returned items trigger an instantaneous count to update availability.
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Manual Stock Count
Manual counting is the simplest sort of inventory tracking. You physically count every item by hand and manually enter the knowledge into a spreadsheet, inventory report, or other database.
The main advantage of manual counting is that it’s relatively inexpensive and allows for a more thorough inspection of every item. You can also roll in the hay quickly with minimal disruption to operations. However, it’s a listing process susceptible to human error and should not be suitable for organizations that store thousands of things.
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Electronic Counting
Electronic counting employs barcode scanning, RFID (Radio-Frequency Identification) scanners, and POS systems to count and track physical stock. Even smaller companies may use teams to count the inventory with scanners that update a database automatically. As a store associate scans each item, the inventory level for that SKU(Stock Keeping Unit) is recorded electronically.
The main advantage of electronic counting is that it’s faster and more accurate than manual counting. It also requires fewer staff members than a manual count, reducing labor costs. However, it’s going to be costlier to implement and time-consuming.
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Full Inventory Counting
Full inventory counting involves physically counting all items in a warehouse or retail space, usually with the help of electronic scanners. Companies can conduct annual physical counts with this method, and lots of consider it the foremost accurate inventory counting method.
Many businesses prefer this method because it provides accurate inventory records for annual financial statements. However, this usually requires businesses to pack up operations for a brief time and may be labor-intensive.
The advantage is that it provides accurate inventory numbers for balance sheets, and the drawbacks are that it often requires the shop to pack up and is labor intensive.
FAQs
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When do you have to Count Your Inventory?
Ans : Ideally, your inventory counts should occur when operations cease at the top of the day or before they begin. If you want to do your inventory while operations are continuing, you want to have a system in situ to account for newly arriving merchandise or items picked for shipping.
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How Often do you have to Count Your Inventory?
Ans : The short answer is as often as possible. A full cycle count of all of your inventory should be done a minimum of once 1 / 4. Physical counts should be done a minimum of once per annum.
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Are you able to Use Anyone To Count Inventory?
Ans : You can, but it’s not advised. Most warehouse operations have count teams or individuals that are trained on procedures and are monitored for accuracy. You ought to have a tracking mechanism in situ to ensure your teams are counting accurately.
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What’s the aim of cycle counting?
Ans : The purpose of cycle counting is to enhance inventory accuracy during a company’s inventory management system. It is often because businesses can identify discrepancies quickly and take corrective action in the case of inventory errors.
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How does one take physical inventory?
Ans : To take a physical inventory, count the number of things available and compare it to the number of things that ought to be available consistent with your inventory records. If there’s a discrepancy, investigate the cause.
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How frequently should organizations perform a physical inventory count?
Ans : Physical inventory counts should be performed annually, quarterly, or monthly, depending on the firm’s specific demand.
