Learn everything you need to know about Why performing physical counting of inventories is important, including various methods, processes, and benefits. Along with it expert advice on why to implement Inventory Count Software that not only facilitates with track records of counting done but analysis too.
We are all aware of How important counting Inventory is in all variant Business fields!
Why performing Inventory Cycle Count is most essential for any Business?
When discussing the inventory count, the first thought that comes to mind is reviewing the physical quantity of products with the one in ERP Software for Warehouses and retail stores. Well, if you examine beyond this, cross verifying the inventory physically and in ERP, is not only restricted to Warehouses and Retail stores but it is also an essential and crucial process for all Businesses like Manufacturing, Construction, Pharmaceutical, and all such relevant huge industries too where managing, keeping and cross verifying accurate track record of products, raw materials, goods are most essential for the best functioning of all further processes.
In this most technologically updated world, even small-scale Business Units implement ERP software to manage inventory than for Large scale industries, Automizing all processes through ERP software is an obvious part. When in such huge industries, discrepancies arise between physically available stock and the one in ERP software, then smooth functioning of not only that Business Units is disturbed but if there is the unavailability of goods, raw materials then as the production is stopped, reaching the final manufactured products to consumers is disturbed that may disrupt Supply Chain processes.
Such discrepancies should never be ignored as they lead to Supply Chain Nightmares. Physical availability of Products less than the one in the System leads to Out of Stock Nightmares whereas more in number than the one in the system leads to Overstock Nightmares.
Thus, verification of Inventory Count physically and in ERP software is a must in all Business fields.
This includes the Inventory Cycle Count or Stock Cycle Count process in Business which checks, balances, and matches the physical inventory present in the Warehouse, Store, or any Business Unit to the one in Inventory Management Software records at regular intervals of time.
Well, being aware of the importance of stock count and before knowing various processes related, and the best way this verification is possible let us first see.
Why does a discrepancy arise between physical Quantity and ERP software?
A few of many factors causing Inventory discrepancies that say counting Inventory is the most important crucial process are
Shrinkage of Inventory: Various factors like employee theft of products, and clerical errors whose entries in ERP Software are missing might cause such discrepancies where physical quantities are not available but in ERP software it is.
Human Error: From physical counting to scanning, incorrect labeling, misplacing the products and many such activities of employees again may cause such discrepancies.
Returns’ mismanagement: Return products’ mismanagement like return products coded in different categories, damaged return products counted with usable products, misplacement of return products to other stacks and all such return mismanagement may again lead to stock discrepancies in reality.
Poor training of employees: Having the best inventory management software but if employees are not trained properly on how to receive, store, label, place at the correct stack, manage and track inventory efficiently, and use software accurately again leads to huge discrepancies.
Receiving damaged products from the vendor itself whose quantity is included in ERP software but in reality, it is not considered as usable stock
Incorrect data was recorded while receiving the products.
Failing to update the Inventory management System on a timely basis.
Fraud from the vendor itself when quantities purchased are in bulk and counting of cartoons physically is only possible rather than all quantities in the cartoon.
Understanding well why do differences arise in number between physical quantity and the one in the software of inventory let us understand,
Benefits of Inventory Cycle Count in Business
Maintaining accurate data of inventory in real and the one in ERP software benefits the optimum profit of your Business in many ways like,
Aid in decision-making strategy: With knowledge of the accurate and up-to-date quantity of inventory actually available, you will be able to make necessary decisions on stock keeping strategy and also able to analyze why the discrepancies in real quantity available and the one in ERP software are arising which further aid to analyze the performance of employees in a business.
Watch over theft activities: When verifying physical activities at regular intervals, staff in Business is aware of it, many theft activities are avoided, also redundant in irregularities, misplacing items and various such shrinkage activities can be reduced to a great extent.
Save resources and time: Cross-verifying Inventory count at regular intervals rather than yearly analysis and verification actually saves time and resources as knowing the discrepancies at the end takes a lot of time in resolving this difference in data, and sometimes it becomes unsolvable too.
Smooth functioning of Other operations: As Inventory Count is performed at regular intervals rather than a yearly process and hence much time and resources are saved and as there is not huge stock that is to check at end of the year there is no shut down of other processes of Business which says all operations of a business are under function throughout the year aiding to more profit in Business.
Efficiency: Keeping watch over accurate amounts of the physical presence of items increases the efficiency of the Business by aiding you to avoid supply chain nightmares as you have reduced discrepancies in the quantity actually available.
Well knowing the importance of Inventory count in Business, let us understand various methodologies of Inventory Count that can be implemented that actually prove the best investment in Business,
5 Types of Inventory Cycle Count Methodology
Well, understanding the importance of Inventory Count, the reason behind discrepancies, and various methodology of Inventory Count, the question here arises is
Would you maintain all the databases related to Inventory Count Manually?
In this most technologically updated scenario, counting inventory physically and verifying it with one in Inventory Management Software is a necessity, but then manual datasheet management of large numbers of products in the catalog is next to impossible.
Management of manual databases is such a time-consuming task that it makes your Business Out of the competition and sucks almost the time of human resources in counting and maintaining datasheets and comparing and analytical reports is almost impossible.
The problems that Business faces in Manual database management
- Identifying time taken by employees cannot be analyzed
- Records of managers validating discrepancies and solving are practically impossible
- When multiple teams are sent for the count again synchronicity and analysis are too tedious.
- Generating analytical reports on the accuracy and performance of employees is impossible
- Managing records of which team is calculating at which location and tracking their accuracy again is a tedious and most time-consuming activity.
All these problems are not at all negligible because if failed to resolve, even the time, money, and manual power spared for Physical Count is a total waste.
The Only Possible Solution
Implement Inventory Count Solution that not only helps to manage such databases but various analytical reports help to check performance analysis of employees too.
It facilitates Automate and solves various processes of your Business while counting stock manually like
- Which employee will perform this process of Physical Stock Count?
- Which Manager will make analytical decisions?
- How much time does your employee spend counting inventories?
- Which employee will perform Inventory counting for which Warehouse and which location?
- How do analyze the accuracy and performance of employees?
- How to manage and synchronize multiple teams at multiple locations simultaneously for a large number of products and multiple Warehouses?
- How do analyze and decide which manager employees are involved in which Physical count task to plan and assign future work?
- Decide on approval or rejection of Inventory count by an employee
- Barcode scanning system feasibility also provided with this solution for counting products with Multiple Quantities avoiding manual count and thus the error.
Have a glance and learn more about How Inventory Count analysis in Odoo is the most optimized systematic Solution for any Business that aids not only in avoiding Stock conditions but also in the analysis of employees' dedication to tasks assigned that ultimately leads to achieving Optimum Profit of your Business.