|Taking an accurate physical inventory is a critical activity. It ensures you are accounting for the financial value of your assets, assures that you are re-ordering the correct products so you do not get out of balance and it helps you to keep your business organized. Here are some tips that you can use to make physical counts more accurate while taking less time.
1. Prepare in Advance – Decide the date well in advance to give yourself enough time to prepare. Schedule time outside of normal business hours. Don’t allow yourself to start counting through the day, or customer service will suffer. If you plan to close early, post a notice to customers at least five days ahead of the date.
2. Make Sure to Have Enough Help – An inventory should take no more than five hours if you have enough help. Determine how many helpers you’ll need well ahead of the date and how you’ll pay them. If you are hiring temps directly, you may want to call your insurance agent to confirm that any liability for a one‐time event will be covered.
3. Organize your Stock – Prior to the count, visually inspect every shelf, bin and display. Organize each product by size, style or stock number and try to keep categories or merchandise together. Front all items on the shelves and consolidate your products so that you do not have multiples of the same item spread around the store unnecessarily. Having a lot of onesies and twosies or will slow down counting dramatically. Make sure not to forget to receive and process all recent shipments prior to the count.
4. Check Your Shelf Tags – As part of your visual inspection make sure the item on the shelf actually matches the style, color, size, description listed on the shelf tag. While your employees are supposed to count the merchandise and not the tags, they often take for granted that the tags are correct – so make sure they are correct.
5. Create a Store Map – Take an oversize piece of paper and make a map of your store and all the fixtures in it. Sketch out the location of every rack, display, wall, and shelf if necessary. Don’t forget the back room or storage area. The map should be used to document that each area of the store has been counted. Once an employee has counted a numbered section, they should cross it off on the map and initial it.
6. Train Your Employees or Helpers – It is important to train your employees before you start counting so that all employees use the same methods to count, document and verify the inventory. It can be very helpful to start by counting one section as a group to make sure everyone is on the same page. Make sure to review the first sheet of each counter to confirm that it was done correctly. If you have first time counters, pair the new person with someone who knows the store and inventory process.
7. Follow a Plan – Number your inventory sheets to correspond to the sections on your map. Your goal is to have lots of sections to make counting easier. To maximize efficiency and accuracy, develop a work flow for the order in which the sections on your map should be counted. For example, you can begin at the front and work counter clockwise.
8. Leverage Your POS System – To speed counting, enter categories from your POS system onto the counting sheets with every price in the section listed. Make sure that the correct prices (regular vs. sales) are displayed – as these will impact inventory value. A short description of the items on the counting sheet can also help speed counting.
9. Plan for the Unexpected – Count in pencil. Have plenty of extra blank sheets for sections that have too many price points to fit on one page or for missed sections. Anything unpriced should be pulled, brought to the counter and counted last.
10. Touch Every Item– When counting, employees should physically touch every item as they count it. This means shaking the boxes (you do not want to count empties), touching hangers and hanging merchandise. Do not allow employees to ‘estimate’ any quantities – as this will decrease the accuracy of the count.
11. Use Tags to Confirm Counts– Every SKU counted should have a tag placed on it confirming that it was counted. You can even mark the count on the tag. Try to use bright colors (such as yellow) that can easily be seen. Counting tags will enable you to quickly scan the store and identify any missed items or areas.
12. Stay focused– Some retailers try to turn inventories into lively events or parties. Try to avoid the temptation – as these types of distractions almost inevitably result in problems with the count. Instead, keep the music turned off and the chatter to a minimum. You will find that your count goes much faster and is more accurate. Save the party for after the count is completed.
13. Total Up All Sheets by Category – If practical, try to tally up the results that night so you have plenty of time to check into any inconsistencies and can clearly recall any complications with the physical count. If necessary, tallying the results can wait until the following morning.
14. Tie Inventory Results Back to Your POS System – Be sure to use the same diligence entering the results back into your POS system. When booking inventory adjustments, make sure you are transferring any shortages out to a dead store (such as #999) or in from store #999 so you have accurate tracking of the differences.
15, Take Immediate Action – Once you have these figures, make sure you use them to improve the operations of your business. With an accurate inventory, you can easily figure out what you should purchase based on what you already have in your store, your shrinkage (i.e. difference between expected and actual inventory caused by inaccurate invoices, sloppy transfers, miskeyed items and theft) and pricing strategies to move excess inventory. Be sure to use this data while it is fresh!