Physical Inventory - Count Planning & Warehouse Preparation

Preparing for a successful Physical Count involves preparation of the Physical Count areas as well as deciding the method for recording the count.

Although the primary focus of a Physical Count tends to be on recording and analyzing the results of the count, it is important to recognize that the driving force behind a good count is the accuracy of the Physical Count itself, which happens outside of the control of the system.

The integrity of the count is largely a by-product of:

  • How well the Warehouse is organized (Product stock locations, tidiness).
  • How well Products and bins are labeled.
  • The level of Product knowledge of the people who are doing the counting.
  • The number of staff available to do the initial count, recount(s) and spot check audits.
  • The level of stock movement during the count process.

The following questions will assist you in planning your count:

  • When is the count to be done?
  • Is this a Full or Partial count?
  • How long will it take to complete the count?
  • How long will it take to input the count quantities?
  • Will business be open or closed (counting over a weekend or holiday or shutting down)?
  • What staff will be available to perform the count and do the data entry?
  • Who will control the distribution of Count Sheets/Tags?
  • How accurate is the costing on the Inventory Evaluation? (This should be addressed prior to freezing the Inventory and printing the Variance Report.)
  • Will before/after Evaluations be required?
  • How will you identify that a section of inventory has been counted?
  • How will you identify that all Products have been counted? (Visual check of the Warehouse)
  • Consider consignment inventory: do you have stock consigned out to Customers or consigned to you from suppliers? How will you be handling the count and reporting on these items?

The following list is comprised of suggestions to assist you in preparing your Warehouse for the count, well in advance of the count:

  • General housekeeping - tidy the Warehouse to allow for easy access, free movement and ease of counting stacked items.
  • Stock locations - where possible, try to consolidate Product into a single location.
  • Logical organization of count areas - by bin location, Product code, supplier's Product code, etc.
  • Clearly label Product for easy identification by count staff.
  • Remove from count area any Product not being counted, such as defective Product awaiting return to the supplier or for disposal.