It’s often said that it’s the most wonderful time of the year, but if you’re tasked with the year-end physical inventory count, you might be dreading this December. You know it’s going to take up a lot of valuable time that you could be devoting to something else, but the improvements it can help you make in terms of operational efficiency could definitely pay off. Here’s a look at how to make this process as stress-free and beneficial as possible.
When you count your inventory, you must include not only finished goods, but also raw material and works in progress. Parts and supplies may also be part of it, depending on your business. It needs to be recorded at either its cost or market value—whichever is lower. You may need to make some estimates. For example, for works in progress, you may need to consider overhead allocations and assessments of percentage of completion.
Count Outside of Business Hours
Because your inventory value is constantly evolving as items are finished, delivered, and shipped, you’ll need to do it at a time when business has essentially come to a standstill. If possible, do the inventory count during your off hours. If you have multiple locations, or other limitations that make that difficult, consider breaking down your count as appropriate, such as by physical location.
Before you even start counting, you need to ensure you’ve planned the whole procedure well to keep disruptions to a minimum. Make sure you have inventory tags on hand, and pre-number them so the process runs smoothly. Carry out a dry run to look for any stumbling blocks. When scheduling, use two-person teams to help protect against fraud. You can also pre-count and set aside any items that tend to move slowly.
Once you’ve finished the count, you need to look into any discrepancies you note between your records and the physical count and make changes where needed.
Learn more about tracking your inventory here.
This blog post was based off of an article from On Target. Read the full article here.