Conducting a physical inventory count

Modified on Mon, 22 Jan at 5:41 PM

Overview

This article gives the basic steps involved in performing a physical inventory count. If this is your first inventory count then "Preparing for your first inventory count" document is a must read.

NOTE: This documentation refelects options available in versions previous to 4.6 of Cloud Retailer.  For documentation on later versions see here.

Procedure

CREATING A NEW COUNT

1) To start an inventory count, go to the back office > Tools > Inventory counting
2) Click "Create New Inventory Count" - note that you may only have one active inventory count per store at a time.
3) Set a reference number (typically today's date + some informational abbreviation on the products being counted), choose a location, and choose an inventory count type.

a) "Manual entry (blank)" means that you are going to scan the items you want to count and do not want the system to validate those items against a group.

b) "All products" means you're doing everything in the entire store.

c) "Use a filter" means that you want to filter for a specific group of products you are going to count. This is typically a department or category of product.

The advantage you gain when you select "all products" or "filter for products" is that the system will tell you about products you did not count, this is critical. EXAMPLE: if you have 100 items in your vodka department and you tell the system that you are going to count this, if there is a product that is NOT on the self but the system thinks you should have a quantity of 1, it will appear in the discrepancies list. If you choose "manual entry" then this product will not appear as a discrepancy as it only reconciles products you scanned (you can't scan what you can't see).

4) Save the inventory count. You must save the inventory count before people can join the count (see below).

**It should be noted that even if a filtered count is created, items not on that count can get added manually. This is to allow mislabeled items to get added to the count. Please be cautious when counting that item purposely not in the filter are not counted. **

Here is a video showing how to create an inventory count:

JOINING A COUNT

In order to actually start counting products, you need to join the physical inventory count. You can do this in a number of ways:

1) From the physical inventory form, there is a "Join Inventory Counnt" button.

2) From the list of inventory counts, you can select one and use the "Join" button.

3) You can also print a QR code for joining the count. Many scanners or phone cameras can use this to go directly to the URL where the inventory count is happening making it easy for a bunch of people to jump onto the count with you.

You CAN have multiple people counting inventory at the same time.

Once you've joined the count you can start searching for or scanning the barcodes of products. As you do, you'll see a history of the last few things you've counted so that if you step away or get confused, you'll know where you're at. Additionally, as you scan products, you'll be able to see who else has counted the same product. This helps everyone ensure that products are not being counted twice. Lastly, you can specify a location that you're counting - typically people will do this when they are in the back room/storage area. If you do this, you'll then be able to differentiate in the count logs how many were counted and where.

If you miscounted you can enter a negative quantity to correct it.

Here is a video showing how to join an inventory count:

IMPORTING A FILE

On the same user interface where you have "joined the count" there's also an option to import a file instead of scanning products with a barcode scanner. This is useful when you've hired an inventory company to do the counting for you. Click the "Choose a file", then "Import" buttons to start the process. The file needs to contain a column called "ProductCode", "Quantity", and "EntryDate" at a minimum. The system will import 500 records at a time and will provide feedback after each block imported. At the top of the screen, it will tell you how many entries were imported and if there were any errors.

FINALIZING A COUNT

Once all products have been counted go back to the inventory count and look at the "Inventory Count Results" - from here you'll see a report showing you items that are different than expected with the biggest "deltas" at the top of the list. These are likely products you want to investigate and confirm that they've been counted properly. You can use one of your inventory counting devices and scan the product to see the log of counted products from the "Join inventory count" function and audit the count. Do this as many times as needed until the discrepancies are accurate. Close and reopen the inventory count reporting page (or refresh it) and review the report one final time.

Once you're ready the last step is to finalize the inventory count. Click the "Finalize Inventory" button - this step CANNOT be undone. Once you do your inventory levels will be updated based on the count.

A few reports we recommend running after your inventory count is completed are:

1) The inventory adjustments report - this contains discrepancies and is found inside the inventory count itself. There are a couple of different ways to get there:

In the inventory count screen below the delta report there is a "View Delta Report" button that will link you to this report.
At the top of the inventory count screen there is a "Counted inventory value report. This will open the same report as above, with a filter applied to show only products that where counted in the inventory. This is also grouped by department for easier reading.

2) "In stock but not recently sold" report - this will identify all the products you have that haven't moved in the last

3 months

3) "Not in stock but recently sold" - this will show you things that ARE moving but you're out of.

4) "Inventory Value Report" for the location that you just inventoried - this will show you the inventory value of the location you just inventoried after the inventory adjustments where made.

With your inventory recently completed the reports mentioned above should be very accurate so it's a great time to evaluate them.

Here is a video covering how to finalize an inventory count:

WHAT HAPPENS WITH NEW PRODUCTS?

You're doing a physical inventory count and what happens? You inevitably run into products where the barcodes don't scan. What should you do?

1) This isn't a POS system issue, it's a process suggestion: when your staff runs into these products have shopping cart, they can place the item into and use a post-it note to write the quantity they counted of that item and stick it to the product. Have someone on your staff responsible for dealing with these items WHILE inventory is taking place.

2) If it's a product that exists and you just need to add a new alternate product code, do it, then you can scan the product and add it to the inventory count. It's that simple.

3) If it's a product that doesn't exist in the system create it. Go through and do this for all the products like this and keep them aside. Once you're done with the inventory count go into the inventory count (by using the edit function) and save the inventory count again. If the items fall inside the filtered group of products, they'll be added to the count. Once the save is complete you can then join the inventory count and scan and count the new products as well.

WHAT HAPPENS IF THE STORE IS OPEN AND I SELL PRODUCT WHILE COUNTING?

Cloud Retailer is aware of the date/time you counted something and when you sold it, so it will handle this intelligently. If you had 10 in stock in the morning and you counted it at 11am and sold 1 at noon, the system will know to compare and adjust against the 10 you had in the morning.

Where it can get dicey is if you have product in multiple locations - for example, in a back room, and on the shelf. If you counted it at 11am, then sold 1 at noon and counted more of it at 1pm, the system will not know if the quantities you counted were from the same location that the customer picked their product from. On this basis, we assume that the total quantity counted is as of the last time the product was scanned/counted in the inventory count.

If you have inventory in multiple locations like a back room and a retail floor, then you should count the back room first, and the retail floor (where customers are actively buying from) second. This way the count time that the system uses to perform the comparison against what it thinks you should have in stock against what you counted will be properly compared against items being sold on the floor.

Here's an example: Jack Daniels 750ml

Counted 10 in back room at 8pm.

Sold 2 at 8:30pm

Sold 1 at 9:30pm

Counted 5 on the retail floor at 10:15pm

The system will assume that 15 is the quantity it should use to compare against. If you did it the other way around you can see the problem:

Counted 8 on the retail floor at 8pm

Sold 2 at 8:30pm

Sold 1 at 9:30pm

Counted 10 in the back room at 10:15pm

Since you counted the retail floor first, and you did it at 8pm you'd have had 8 at that time. Now the system would assume you have 18 in stock as of 10:15pm which is INCORRECT.

***Please keep in mind that when doing a filtered or all products inventory, products that are included in the inventory are added to the inventory at 0 counted at the time the inventory is created. For Example:

You create a filtered inventory of your Whiskey department at 10:00am and start scanning product. At 12:00pm, you finish your scanning. If you didn't scan your Knob Creek Whiskey 750ml and you press the finalize inventory button, Cloud Retailer will show that you had 0 on hand at 10:00am.

After the inventory is complete and finalized, it is ALWAYS a good idea to spot check your inventory. All of our reports throughout the inventory process can be printed out or exported to an Excel spreadsheet. If you find a large error in your inventory, create a new blank inventory and update the products that need to be updated. A blank inventory will ONLY effect products that are counted in the inventory. It will not effect products that are not scanned.

REPORTS YOU MIGHT LIKE

***Inventory value report

This report should be run immediately after the count is completed and will tell you the value of your inventory broken down by department and category at cost and at retail. Additionally, you can choose the option to "Display standalone results under groups" to see every individual product - we recommend running the report in this fashion and then exporting the results.

***Inventory adjustment report

This is accessible from inside the inventory count - there's a button that says "View delta report". It will show you the difference between what you counted and what the system thought you should have. The "View delta report" button is only visible once the inventory count has been finalized.

***Inventory adjustment report - filtered by counted products

This is accessible from inside the inventory count -there is a button on the left side that says "Counted inventory value report". This report will show you what has been counted as well as the average or last cost.

***In stock but not recently sold report

This report will show you all products that you have in stock but haven't sold in the last 3 months (filter is adjustable). Probably a good idea to try to get rid of many of these and bring in more productive inventory.

***Everything not in stock but has sold

This report will show you everything that you have 0 in stock and you have sold in the last 30 days (filter is adjustable). These could be products that you missed the last time you ordered or maybe got bumped off the shelf by a crafty competition supplier's salesperson and you should consider reordering.

CONCLUSION / IMPORTANT NOTE

Always, always... always do a test run with a small group of products a few days before doing the real count. Our experience is that most users don't do inventory counts very often so they come back to it rusty which can be quite stressful when you're trying to manage a group of employees that are not super thrilled to be there on a normal day off to count inventory. By going through it once a few days prior your memory is refreshed, you get a chance to test your equipment (and you should test it ALL), and if there are any questions you have an opportunity to ask without it being an emergency. No question you should do a trial run beforehand.

SERVICES

Considering how few and far in-between you do this RITE can conduct a training session for you AND/OR we can execute the import of any files or run all reports you might need for you. These are considered paid for "premium services".

We also offer free training once a month on how to conduct inventory counts. Please refer to our community training schedule here for more information:
Cloud Retailer Community Training Schedule and Calendar

OTHER READING:

Preparing for your first physical inventory count

Working with a 3rd party to count your inventory

Conducting a physical inventory count

Overview

Procedure

Related Videos: