How to do an inventory count in 2021 | Veeqo (2023)

Learn how best to perform physical inventory counts, the benefits of inventory cycle counting, and how barcode scanning can help ecommerce businesses.

Knowing how much inventory you have on hand is key for any ecommerce business. When you get it wrong, you tend to oversell or overstock, which can hurt your business in a number of ways. While the idea of ​​keeping track of your inventory levels may seem simple to small retailers who are just starting out, it can quickly become more complex. Especially when you start digging inMultichannel-E-Commerce.

What is an inventory count?

An inventory count is a way to keep track of what products are currently in stock and in what quantities.

An inventory count allows you to determine the quantity and condition of the products you stock in a store or warehouse. Conducting an inventory count allows you to compare your actual inventory to the numbers you have recordedInventarverfolgungspreadsheets or tools. Do they match? If not, you can ask why and implement plans and procedures to reduce the discrepancy.

There are various methods and best practices for inventory counting. For example, while some companies choose to have inventory counted annually or quarterly, others do continuous inventory counting (cyclical counting).

Why are inventory counts important?

Inventory counts are important because they tell you what you need to sell and help you avoid overselling and stock-outs. You can also use the information from inventory censuses to inform yoursstock forecastand identify which products are costing you money through overstock.

An inventory count will help you ensure that your sales statistics and records accurately match the inventory you have on hand. In addition, it helps you to determine your "decay", i. H. the amount of goods lost without explanation.

When you sell across multiple channels and across multiple warehouses or retail locations, reliable inventory counts are a must. Not having accurate inventory numbers leads to dissatisfied customers when they wait a long time for an oversold product.

If you have a small retail business, you can probably do multiple manual counts at a glance throughout the day. However, once you start scaling your business, this becomes impractical. Because of this, ecommerce retailers looking to scale their business or add more sales channels will look to more advanced inventory tracking systems.

The difference between a physical count and a cycle count

With the digital picking system from Veeqo (inklusive Scanner) you can task your picking team to perform incremental stock counts during their downtime.

Fewer and fewer companies continue to do annual physical counts, but it's still the right choice for specific industries and locations. It allows you to start the next fiscal year on a clean slate and gives you a specific period of time to set aside for counting. However, you have to turn off (or account for) your sending and receiving, and that takes quite a long time.

If your employees do the counting by hand, there is a high possibility of human error. Give them plenty of time to do the count and make sure they get plenty of breaks and snacks.

Some businesses opt for a mix of regular cycle counts and annual counts to closely monitor their inventories and keep tabs on shrinkage.

One of the main advantages of an inventory cycle count is:

• You don't have to shut down your business to get accurate numbers
• It's easier for your warehouse team
• You will have more accurate stock counts throughout the year.

Eight tips for conducting an inventory count

With a little planning and employee training, you can make your inventory a smooth process. Use the tips below for your next count.

1. Plan ahead

Regardless of what methods you use and how often you take your physical inventories, make sure you plan them ahead of time. Then start tracking your typical sales downtime.

For example, many retailers find that mid to late January is slow while the run-up to Christmas is hectic. December is not the time to burden your staff with large inventory numbers!

Once you've examined your selling patterns for downtime, plan your inventory counts.

2. Inform everyone as soon as possible

Once you know when to take your inventory. You then need to make sure everyone else knows too. This means:

• Notification to your team
• Assignment of extra shifts to relevant employees
• Notify your customers when you close a physical store during business hours

If you do the count manually, you must stop the activity in that place for the entire duration. No stock should go in or out during this time to ensure complete accuracy. So there may be others you need to inform for this reason.

3. Know your warehouse/store layout

It's always a lot easier to count the inventory of your store or warehouse when you have a clear map of the square footage you need to cover. If you have an official floor plan, you can use that to plan your attack. If you don't, start by sketching every detail in the room. Include all walls, racks, shelves, display units, workstations and your back room. Don't forget to plan for overflow storage, and be sure to check the closets on and around all computer terminals and stations.

4. Label your warehouse correctly

Which brings us to the next point – labeling your warehouse. Not only is this essential for efficient and accurate inventory counting, but it is also a general best practice for inventory management.

Assign specific numbers to each of your displays, shelves, shelves and wall units and make sure the numbers match your card. You can then include these numbers on your tracking sheets for you to check off when you do your physical inventory. Additionally, you can easily assign different team members to specific sections to complete your count faster on the day.

5. Train your team

Counting inventory may sound like a simple task, but when done properly, there are many procedures and systems involved. For a successful and accurate inventory, your employees need to know exactly what these procedures are and how they work.

Choose one of the following training strategies:

• Organize a training session before the date of your count.
• Schedule time for a training session the day before the start of the count.

During this training period, guide your team members through all aspects of the count, including the effective count, the forms to use, and the use of the equipment involved.

6. Use inventory tags

Inventar-Tagsare a great way to easily keep track of which items have been counted. They are especially useful when manually completing your count.

First, make sure you get two-part tags. Then just have your team fill them out as they do the count — pin one in the appropriate bin and keep the other for reference.

7. Split your team into multiple partners

By now you have:

• A dedicated team of people to work on census day.
• A clearly dissected, mapped and labeled camp.
• A sufficient number of tags for inventory counting.

It's time to split your team into counting partners and match each pair to your own

own storage area. With this method, one person is usually responsible for counting the inventory in each bin in their area while the other person marks the count tags with relevant information.

They then return the tags to a central warehouse worker, who verifies the tag information and assigns that pair to another section of the warehouse for counting.

7) Think about the human side

Finally, it's important to remember that taking a physical inventory is a tiring task for everyone involved. Your team might be there for a while - counting and checking numbers endlessly is a tiring task.

So it's important to think about the human side of things during the physical count. Ensure that sufficient food and drink is available and that employees are given regular breaks. Keeping everyone well-fed, hydrated, and rested could prevent a damaging counting error. Try to turn inventory into a fun event - you can set up competitions, let them listen to the music of their choice, and give them gift cards and rewards for working that tiring shift.

What to do with stocks in transit?

As you prepare for your physical count, you need to consider your inventory in transit. If you have goods in transit during the inventory period, you need to be extra careful to count them. This could apply to goods being transported between warehouses, goods that have been sold, or goods in transit from suppliers.

To determine if you need to count your vendor inventory in transit, you must first determine if a sale has occurred. When you have paid for the items or agreed to subsequent payment, title has passed to you and you are required by law to count that inventory in transit. Remember - title transfers when the goods reach the FOB point, which means they are 'cargo on board'.

However, if the sale title hasn't transferred to you yet (perhaps you ordered the item but haven't paid for it yet), you don't need to count them.

It's also important to keep track of what inventory you've ordered from suppliers. Something Veeqo can do. This means that you always have a complete overview of the inventory you have ordered and its location. This is the key to staying in control of your inventory.

The Benefits of Inventory Cycle Counts

While a full annual physical count used to be standard across almost every industry, more and more companies are moving toward cycle counting, where small counts are performed continuously. With cycle counting, you can minimize interruptions while maintaining accurate counts.

The benefits of an inventory cycle count include:

More agility when executing orders

Cycle Counting allows you to count items in smaller batches throughout the year, reducing discrepancies in your ordering system and resulting in fewer items on backorder. If you want to meet your customers' needs and increase your profits, you can even schedule monthly counts of your top sellers.

Current information

If you have an inaccurate inventory count, you may find that you are overordering to keep extra stock on hand. With this strategy, you risk obsolete inventory and increased storage costs.

You recognize shipping failures faster

Regular cycle counts give you accurate, up-to-date information on all shipping, receiving, and inventory transfer issues. This reduces your costs typically spent on expedited shipping when trying to overcome inaccurate inventory records and appease angry customers.

Reduce errors and theft

If you count more often, you can spot errors and discrepancies more quickly. In this way, you can get a grip on a theft more quickly and take appropriate countermeasures.

Less disruption

A yearly inventory takes a long time and messes up your normal systems. It's often a night's drudgery that exhausts your employees—you may even need to hire extra hands. With a cyclic inventory count, however, only small batches are counted at once. There is no need to shut down your operations and the counting process is integrated into your normal workflow.

How to perform a cycle inventory count

When it comes to your storage efficiency, moving to cyclic inventory counting can be a game changer. With cyclic inventory counts, you assign your team “partial” inventories, or inventory counting tasks, to be performed regularly and continuously. This means your inventory will be counted in pieces throughout the year so you can avoid

For example:

Suppose you have two warehouse workers who are responsible for counting inventory - Bob and Jenny. This is how a cycle inventory count might work:

• Week 1 - Both Bob and Jenny are each allocated 10% of your total inventory to count during shift downtime.
• Week 2 - Bob and Jenny are each allocated an additional 10%, excluding stock already counted.
• Weeks 3-5 - Repeat until they have counted the entire inventory - 50% from Bob, 50% from Jenny.

By simply assigning small weekly counting tasks to your team, just two employees can easily count your entire inventory every five weeks.

The benefits of using a barcode scanner for inventory counting

Using barcode scannersbecause cycle counting can add another layer of efficiency to your physical inventory checks. Completely eliminating the need for tags or messy paperwork, they allow your team members to quickly and accurately meet their weekly count quotas.

This is how counting with scanners usually works:

1. Bob finds some downtime during his shift and decides to do part of his weekly counting job.
2. He grabs a scanner, logs in, and opens the inventory counting area.
3. A list of the products assigned to him for counting appears.
4. Bob goes to the storage location for his first product, scans the barcode and starts counting.
5. Any inventory discrepancies are corrected directly on the screen by Bob.
6. Then he moves on to the next product on his counting list.

Bob can go through as many products on his counting list as he likes until needed again at his typical stock station, e.g. B. when picking or packing. additionallyVeeqo-Scannerhas a dedicated inventory counting section that makes cycle inventory counts extremely easy.

Learn more about Veeqo's inventory management software for e-commerce.

What to do after an inventory count?

After your inventory count is complete, it's time to follow up on the information you've gathered throughout the process.

• Look for (and investigate) obvious errors
• Update your iinventory reportSpreadsheet calculations
• Compare your data with previous inventory censuses
• Identify problems and plan actions to fix them

Possible reasons for deviations

No matter what you do, there will always be discrepancies in your inventory count. Theft, damage and simple human error can affect the numbers. Most companies have a certain "shrinkage" percentage that they aim for, but if you find that your shrinkage is much higher than your target, you need to implement new receiving and stocking policies. You may also have a safety issue on your hands.

On the other hand, if your shrinkage is much less than expected, you may have made a mistake during the count yourself. Having an auditor on hand can help locate problems with your methods and results.

Here are some of the most common reasons for deviations from an inventory count:

• Theft– Unfortunately, the number one cause of discrepancies is theft. Even if you think you can trust your employees, theft in warehouses is always a reality.
• Loss- Just like at home, items can get lost in a storage environment. When your employees lose or misplace inventory, you need new policies to deal with it.
• Human error– Similar to loss, mistakes can happen in any storage environment. If you don't have robust systems in place, it's easy for your employees to mishandle, miscount, receive and/or ship inventory.
• count mistakes– Of course, some of the errors can occur during the inventory count itself. Using a scanner can help remove human error from the inventory

The information you get during your inventory count can be extremely valuable. It can tell you if you're dealing with internal theft, careless mistakes, or a combination of both. Therefore, it is crucial to make the whole process as accurate and effective as possible. This is also why so many companies are switching to cycle counting.

We hope you found this guide interesting. If you think your business needs to move to a more advanced form of inventory management, consider Veeqo. Veeqo is the complete eCommerce solution that handles your inventory management, warehousing operations, and shipping integrations. You can try Veeqo by either signing up for a free trial or by booking a demo today.

About the author

This article was written by Michelle Lau, Head of Product at Veeqo. Michelle leads a team of product managers to ensure Veeqo is the best order fulfillment tool for ecommerce retailers.

Knowing how much inventory you have on hand is key for any ecommerce business. When you get it wrong, you tend to oversell or overstock, which can hurt your business in a number of ways. While the idea of ​​keeping track of your inventory levels may seem simple to small retailers who are just starting out, it can quickly become more complex. Especially when you start digging inMultichannel-E-Commerce.