Why count matters?

Do you know if your inventory has been subjected to some unexplained loss? Are you overstocking?  Do you have the most critical supplies well stocked? The answers to all these questions can be addressed by having a physical count of the inventory. The physical count of the inventory is a key to any business unit that uses this information for decision making and ensuring that financial statements reflect that accuracy of the inventory records. It is advisable to have complete physical inventory counted on an established cadence which can be bi-weekly, end of the month, quarter or annually to be aligned with the financial reporting period. It is further recommended that appropriate controls be in place to protect and safe guard against misuse of assets by providing for effective controls such as segregation of duties in the inventory process. Cycle count is essential in this process and is pivotal to ensuring inventory accuracy. It is generally done at such times labeled as “off hours” when the stock is not moving at an aggressive pace, typically before start of business day. There are numerous ways to do this. The most predominant method is to classify as wall to wall where the stock is divided into distinct locations and the technician starts at one location and works his/her way until the full floor (wall to wall) has been counted. Once the count has been completed, review the count vis-à-vis the earlier records to determine variance and arrive at a root-cause. Doing this provides timely and accurate feedback to the business unit to implement corrective action(s) based on the identified root-cause which can be either loss, incorrect data, etc. This process  also provides a good mechanism for the business unit to educate its employees as it relates to the inventory process.