Inventory Count Preparation Tips: How to Ensure Accurate Stock Counts.

Single Counter — When it comes to successful inventory counts, preparation is the key.

Inventory Count Preparation Tips

Here are some general guidelines and tips for conducting a spot count, cycle count, or year-end physical inventory. These are typically applicable to a bin-controlled manufacturing warehouse setting. Your counting environment may vary depending on your industry, the type of items, the warehouse layout, and the inventory management software used.

Forklift & Racking — Above: A place for everything, everything in its place.

1. General Housekeeping

Organize the warehouse to ensure easy access, free movement, and a simple stacked item count. Remove all trash, excess packaging, pallets, and plastic banding from counting areas.
Ensure that aisle, rack, shelf, and bin locations are labeled. Update the labeling if necessary.
Remove items not included in the count from the counting areas, such as defective materials to be returned to vendors, scrapped, or awaiting disposal. Ideally, these should be placed in a virtual Material Review Board (MRB) location and identified with a red 1” diameter round label.
Get rid of clutter.
Make sure all areas are well-lit and accessible for counting.
Find and prepare the equipment needed for the count, such as portable stairs, man-lifts, forklifts, etc.

2. Count Teams

Assign and display count teams in common areas promptly.
Only individuals familiar with the items should be tasked with counting. Accurate part identification is essential!
Count teams should consist of two members—one to count and one to record and verify; switch roles frequently. Visit our blog.
All participants in the physical inventory must be briefed before counting begins.

3. Count Preparation

Obsolete or slow-moving items should be pre-counted, packaged, and clearly labeled.
Small items should be bagged and sealed, and inventory identification labels should be attached to facilitate easy counting on the count day.
Whenever possible, group all identical inventory items in a single location.
Check if multiple boxes are open for the same item. Consolidate the items and seal the remaining boxes, ensuring only one box or bag with partials is open.
Label all inventory items clearly with the item number and UOM label for easy identification by the count teams. The Unit of Measure (UOM) often causes discrepancies during reconciliation. Are we counting in Eaches, pounds, sheets?
Decide how Work in Process (WIP) material will be counted.
Identify items not needed for production or sales orders before the count. These can be pre-counted, sealed, or shrink-wrapped and labeled with the item number, UOM, count date, and quantity.
Dress Rehearsal: Walk through with the counting team to identify materials for counting on the count day. Check the shipping and receiving departments for items and decide if those will be included in the count.

4. Inventory Reports

Verify negative on-hand quantities—Examine any items in your inventory management system with a negative amount. These items might have been oversold, unreceived, or pre-billed.
Items without cost - Everything incurs a cost. Find all items in your system with a quantity of one or more on hand but lacking a recorded cost. Determine the correct cost and update the records before the count.
Incorrect bin locations - Bin locations might have been mistakenly added to the inventory management system. Investigate the creation of these bins and remove them.
Should we display the quantity on hand for counted items to the counters if you will be using system-generated worksheets for your count? Check our recent post here blind counts or show quantity

5. Supplies

Employing the tag method, 2-Part carbonless inventory tagsUline S-2937 0000-0499 Style with adhesive backing.
Color-coded circular labels, 1” in diameter.Uline Green S-2235GR (Counted)Uline Red S-2235RED (Do Not Count)
Plain sheets of paper.
Clipboards for each team involved in counting.
Pens, markers, and highlighters.
Binder clips for securing worksheets.
Counting scales, calibrated with fresh batteries.
Calculators.
Tape measures. (Calipers if necessary).
Supplies for bagging and equipment for sealing bags.
Clear packing tape and a handheld dispenser.
A box cutter.

Summary

In our Physical Inventory and Cycle Counting workshops, we impart best practices for organizing and managing warehouses. Our goal is to attain the highest level of inventory accuracy and enhance overall counting efficiency. The essential elements for achieving this are preparation, organization, and training.

Roger Pujol is a business improvement consultant and the founder of Champion Business Solutions, LLC. He speaks and writes about his experiences helping small—and medium-sized businesses (SMBs) improve their operations.

Inventory Count Preparation Tips: How to Ensure Accurate Stock Counts.