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

An inventory count occurs when the retailer closes operations to physically inspect each inventory item. With cycle counting, you continuously perform inventory counts on a rolling basis, counting small subsets of your inventory on specific days. For example, a company can count the inventory of Section X every quarter, Section Y every month, and so on.

Cycle counts help by regularly reconciling your physical inventory with your digital records, ensuring consistency and accuracy. If you can't close for an extended period of time to take an annual inventory, this method is often ideal. It also protects against overselling when you have an unexpected surge in sales.

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

(Video) Inventory Counting: Process & Methods

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.

How to do an inventory count in 2021 | Veeqo (1)

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.

(Video) What Is a Physical Inventory Count?

How to do an inventory count in 2021 | Veeqo (2)

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.

How to do an inventory count in 2021 | Veeqo (3)

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'.

(Video) 30-How to make inventory counts

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.

The same logic applies when you sell items to your customers. When the goods have reached the FOB point, you should stop counting them in your own inventory. These goods in transit now belong to your buyer and should not be included in your counts.

When you have more complex inventory requirements, this is incredibly difficult to track manually as you have to look through various emails, invoices and spreadsheets to figure out where you are. This is where dedicated ecommerce fulfillment software often comes in handy. For example, Veeqo keeps track of your entire inventory at all times. Including what you have ordered from suppliers.

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

(Video) How To Make a Physical Inventory Count More Efficient

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.

How to do an inventory count in 2021 | Veeqo (4)

The benefits of using a barcode scanner for inventory counting

How to do an inventory count in 2021 | Veeqo (5)

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

How to do an inventory count in 2021 | Veeqo (6)

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.

(Video) Go Home! Streamline Your Inventory Counts and Get Home Early

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.


How do you count inventory efficiently? ›

10 Stock Counting Tips for Retailers
  1. Taking a physical count of inventory? ...
  2. Use inventory scanners or other types of stock counting technologies. ...
  3. Choose your “counters” wisely. ...
  4. If you must do a full physical inventory count, schedule it ahead of time. ...
  5. Communicate, communicate, communicate. ...
  6. Map your store.
May 4, 2021

How do you prepare inventory count? ›

How to Prepare Your Inventory for a Physical Count - Part 1
  1. 1 - Organize your parts. ...
  2. 2 - Identify countable and uncountable parts. ...
  3. 3 - Designate counting areas. ...
  4. 4 – Check your negative on hand counts. ...
  5. 5 – Check for parts with no cost. ...
  6. 6 – Delete any incorrect Bin Locations from the system.
Feb 28, 2019

How do you automate inventory count? ›

Using barcodes, RFID or QR codes is one method of tracking your inventory levels and their movements. This automated process includes some manual labor but automates the management side of inventory control. To get started, determine whether your product already uses a format you can leverage, such as UPC codes.

What is an example of inventory count? ›

For example, a clothing business might perform an inventory count as the season is coming to an end to make sure it has sold all the stock it planned to sell that season, and to prepare for the next season's products to be stored in its place.

What is the best way to do an inventory count in warehouse? ›

There are two generally accepted methods for inventory counting:
  1. Physical inventory count - a systematic, physical inventory counting process.
  2. Cycle count - a sampled inventory process that uses statistical methods to predict actual inventory levels.

What is the simplest way to manage inventory? ›

Here are some of the techniques that many small businesses use to manage inventory:
  • Fine-tune your forecasting. ...
  • Use the FIFO method (first in, first out). ...
  • Identify low-turn stock. ...
  • Audit your stock. ...
  • Use cloud-based inventory management software. ...
  • Track your stock levels at all times. ...
  • Reduce equipment repair times.
Jan 28, 2023

How do I use Excel to calculate inventory? ›

How to Create An Excel Inventory Management System
  1. Create a spreadsheet. To manage your inventory in Microsoft Excel, begin by creating a new spreadsheet. ...
  2. Add any necessary product categories as columns. ...
  3. Add each product that you carry to the spreadsheet. ...
  4. Adjust the quantities as you make sales.

How do companies keep their inventory count accurate? ›

Perform regular cycle counts: Cycle counting involves counting a certain amount of inventory each day or week to ensure accuracy. Utilize technology: Investing in software or hardware such as RFID tags, scanners, and mobile devices can help streamline inventory tracking and reduce manual errors.

What automation can be used to manage inventory? ›

Automated inventory management uses technology, including robotic process automation (RPA) and intelligent process management (IPA), to provide real-time visibility into inventory. With this technology, most businesses track and organize stock, supplies, and sales.

What are two common inventory counting systems? ›

Two types of inventory are periodic and perpetual inventory. Both are accounting methods that businesses use to track the number of products they have available.

How do you write an inventory sample? ›

How to write an inventory report
  1. Create a column for inventory items. Similar to an inventory sheet template, create a list of items in your inventory using a vertical column. ...
  2. Create a column for descriptions. ...
  3. Assign a price to each item. ...
  4. Create a column for remaining stock. ...
  5. Select a time frame.
Jul 15, 2019

What is an inventory give example? ›

Inventory refers to all the items, goods, merchandise, and materials held by a business for selling in the market to earn a profit. Example: If a newspaper vendor uses a vehicle to deliver newspapers to the customers, only the newspaper will be considered inventory. The vehicle will be treated as an asset.

What is the most accurate method of tracking inventory counts? ›

Implement a barcode system: Barcodes are an efficient and accurate way to identify and track inventory.

What are the three different inventory counting methods? ›

What are the different types of inventory counting? Some of the most-used types of counting are cycle counting, spot counting (sometimes also known as ad-hoc or blind counting), and tag counting.

What are the 4 tips when it comes to inventory control? ›

21 Inventory Management Tips
  • Learn about the four kinds of inventory. ...
  • Manage vendor and supplier relationships. ...
  • Plan for the unexpected. ...
  • Prioritize your inventory. ...
  • Understand the 80/20 inventory rule. ...
  • Be consistent in how you receive stock. ...
  • Order restocks yourself. ...
  • Don't take a one-size-fits-all approach.
May 3, 2021

What is the 80 20 inventory rule? ›

What Is the 80/20 Inventory Management Rule? The 80/20 rule states that 80% of results come from 20% of efforts, customers or another unit of measurement. When applied to inventory, the rule suggests that companies earn roughly 80% of their profits from 20% of their products.

Why inventory management is so difficult? ›

Inventory is unpredictable

For businesses with fairly fluid order patterns, knowing how much stock to have on hand can be difficult. This stress is understandable – managers face competing pressures to have enough stock on hand for every eventuality while at the same time avoiding costly, inefficient overstocking.

What are the 3 biggest problems with too much inventory? ›

5 Negative Effects of Keeping Too Much Inventory

Reduces profits. Increases storage costs. Heightens risk of product obsolescence.

How do I use Excel to calculate efficiently? ›

Search: By default, Excel searches first across rows and then down columns, which you can reverse by selecting "By columns" in the dropdown menu. This option can improve your search speed when you search by "Find next."

Does Excel have an inventory template? ›

For details about your existing equipment, an Excel inventory template stores everything you need, including stock number, physical condition, and financial status.

How do you achieve 99.9 accuracy in inventory? ›

Inventory accuracy can reach approximately 99.9% when inventory is tracked using barcodes and RF handheld inventory functions. Inventory accuracy is ensured by scanning and validating locations and product barcodes.

How do you get 100% inventory accuracy? ›

Improving Inventory Accuracy
  1. Pick a quality program and stick with it. ...
  2. Know what you are up against. ...
  3. Keep your processes simple. ...
  4. Examine your entire supply chain. ...
  5. Establish product traceability during the distribution life cycle. ...
  6. Select technology that fits your needs. ...
  7. Implement a continuous cycle-counting program.
Mar 15, 2007

What are 4 factors that must be considered for accurate inventory valuation? ›

There are four accepted methods of inventory valuation.
  • Specific Identification.
  • First-In, First-Out (FIFO)
  • Last-In, First-Out (LIFO)
  • Weighted Average Cost.

What is the most widely used method of inventory control? ›

The Economic Order Quantity inventory management method is one of the oldest and most popular. EOQ lets you know the number of inventory units you should order to reduce costs based on your company holding costs, ordering costs, and rate of demand.

Which is the best form of inventory control for inventory? ›

A perpetual inventory provides a highly detailed view of inventory changes and an accurate accounting of inventory levels without the need for manual inventory counts. It is suitable for all sizes of businesses and is necessary for stores with high sales volume or multiple locations.

What are the two types of controls used in inventory management? ›

The two main types of inventory control methods are perpetual inventory and periodic inventory. Both are widely used across industries, and businesses often choose one over the other due to the size of their inventory and scope of their distribution model (rather than one system functioning better than the other).

What are the 4 types of inventory? ›

There are four main types of inventory: raw materials/components, WIP, finished goods and MRO.

What are the 4 types of inventory management? ›

The four types of inventory management are just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ) , and days sales of inventory (DSI). Each inventory management style works better for different businesses, and there are pros and cons to each type.

What are the two main tasks of inventory? ›

The two sides are Inventory Control and Inventory Replenishment.

How do you write an inventory report? ›

How to create an inventory report
  1. Build your list of items. Export this from your POS, inventory management software, or another database that has the information. ...
  2. Establish your timeframe. ...
  3. Run your reports. ...
  4. Weekly and monthly. ...
  5. After busy selling seasons. ...
  6. Based on your business operations. ...
  7. Inventory on hand. ...
  8. Low stock.
Jun 15, 2022

What is the most common inventory? ›

The three most commonly used inventory are raw materials, work in progress (WIP) inventory and the finished goods. Inventory refers to all the goods, items, and materials purchased or manufactured by a business for selling to the customer to make a profit.

What is simple inventory? ›

Simple Inventory Control is a professional stock control, inventory management and tracking software for small to medium businesses across one or several locations.

What are the 3 types of inventory and examples? ›

The three types of inventories are direct material inventory, work in progress inventory and the finished goods inventory where the direct material inventory includes the stock of raw material which the company has purchased for its use in production; work in progress inventory is the cost accumulated to the goods that ...

What are the 2 most common methods of inventory valuation? ›

– There are three techniques of inventory valuation: FIFO (First In, First Out), LIFO (Last In, First Out), and WAC (Weighted Average Cost).

What are two ways you can track inventory? ›

Inventory Tracking Methods
  • Manual Tracking: Those who aren't ready to invest in an inventory tracking system often track their inventory using pen and paper. ...
  • Card System: ...
  • Spreadsheets: ...
  • Accounting Systems: ...
  • Inventory Management Systems: ...
  • Open Source Software: ...
  • Software-as-a-Service (SaaS): ...
  • Cloud-Based Software:
Nov 3, 2020

What are the four 4 categories of inventory? ›

There are four different top-level inventory types: raw materials, work-in-progress (WIP), merchandise and supplies, and finished goods. These four main categories help businesses classify and track items that are in stock or that they might need in the future.


1. AUD: Performing Procedures and Communications: Observing an Inventory Count
(Becker Professional Education)
2. Inventory count
(Lightspeed Retail POS (X-Series))
3. What Is Cycle Counting?
4. How to count inventory with a phone -- Cohub Inventory for Shopify
5. Cycle Count Best Practices & How To Cycle Count
(Warehousing & Distribution Tips By LaceUp )
6. How to Work with Inventory Count in Loyverse
(Loyverse Point of Sale System)
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