Author: Chad Symens

Buying, making and storing inventory all cost your business money. The good news, the majority of your inventory-related expenses are deductible when it’s time to file your taxes. If you have the scenario where you can’t sell all of your inventory, you may be able to generate some additional deductions out of it by selling it at a low price or giving it away.

Let’s look at a few options you may have.

Closing inventory, also referred to as ending inventory, refers to the amount of inventory a business has left on the shelves and in stock at the end of the accounting year. Closing inventory is counted in 2 different ways:

• To reflect the physical amount of products left in stock
• To reflect the monetary value of products left in stock

In these 2 cases, you’ll either have a number of units or dollars left to reflect.

Ending inventory is the value of the stock or product that remains at the end of an accounting period.

The ending inventory refers to the final value of products held by a company at the end of a financial period such as the accounting year.

Ending inventory is determined by the value of the beginning inventory, plus purchases less the cost of goods sold.

Estimating Closing Inventory

Now, if you can’t count inventory on hand at the end of an accounting period or you can assign values to products, there’s a few things you can do. There’s a wide range of situations that can cause this, like too much shipping activity at the end of the month to do a count. If your staff is pressed for time or you just don’t have anyone available, there are two methods you can use to estimate the closing inventory.

3 Methods To Calculate Closing Inventory

(1) The Gross Profit Method

To calculate closing inventory by the gross profit method, use these 3 steps:

1. Add the cost of beginning inventory plus the cost of purchases during the time frame = the cost of goods available for sale.
2. Multiply the expected gross profit percentage by sales during the time period = the estimated cost of goods sold.
3. Subtract the number from Step 1 minus the number from Step 2 = ending inventory.

(2) The Retail Inventory Method

This approach is popular among retailers to calculate closing inventory.  It’s a little different from above, here’s the 4 steps to follow:

1. Calculate Cost-To-Retail Percentage: Cost divided by retail price.
2. Calculate Cost Of Goods Available For Sale: Cost of beginning inventory plus cost of purchases.
3. Calculate Cost Of Sales During The Period: Sales x cost-to-retail percentage.
4. Calculate Ending Inventory: Cost of goods available for sale minus cost of sales during the period.

(3) Physical Counting Method

If you need an accurate count of closing inventory, rather than an estimate, physically counting is the safest way to go. If you have the time and manpower, the simplest way to calculate ending inventory is the following 5 steps:

1. Count the quantity of unsold products on the store’s shelves and stockroom.
2. Determine the cost of each individual unit.
3. Multiply the cost by the number of products.
4. If you have different prices for products, you will need to multiply separately, then add all the amounts together.
5. This will give you a dollar amount for your ending inventory.

How Ending Inventory Is Used

Your ending inventory will always be based on the market value or the lowest value of the goods that your company possesses. The cost of purchases made for the inventory is added to the value of the stock at the beginning of the selected period.

The market value of goods created or distributed by a company is generally higher than the associated costs. Despite that, it can change if the goods become outdated and experience depreciation and/or become obsolete.

In this case, the market value can fall below the cost of production for the goods, this would create a loss in asset value.

Why Ending Inventory Is Important

It’s a good idea to keep track of your inventory over the entirety of the fiscal year, but ending inventory is particularly important to calculate. Not only in order to ensure your actual stocks match with your sales and purchases over the course of the the accounting period, but also because this is often required in the case of an audit.

Whether your ending inventory matches with your financial transactions can indicate how well your business has stuck to its budget and can be useful for determining whether there are any glaring problems with production costs.

It is also important to a business because ending inventory carries over to the new accounting period. An inaccurate measure of stock value would then continue to have financial implications into the new accounting period.

Distribution Cost, also called distribution expenses, are costs that are incurred to deliver your product from the production unit to the end user (your customer).

Examples Of Distribution Cost

Distribution costs can refer to a number of different expenses, such as;

• Costs of handling
• Costs of shipping
• Costs of packing
• Costs of distribution employees
• Costs of freight
• Costs of storage

If your distributor will be the one shipping a product to a retailer and that retailer sells it to the end user, all the individual distribution expenses at each stage would be included in the total distribution cost. In some cases, manufacturers will have a production unit at one place and product pick up is forwarded to another place. Any cost for moving the product from production to the pick up point is also added to the total distribution cost.

There’s other types of expenses that can be defined as distributions costs. A good example to use is handling cost, these costs can include;

• Production place
• Sales point
• Storehouse
• Packing costs
• Managerial costs
• Freight

Freight cost is usually the most important component of distribution costs. If the product is manufactured and sold in same country, freight cost usually refers to the “Trucking” or such transport fare to deliver the product.

If a product is sold internationally, it may include Air Freight, Less than container load (LCL), Day-Definite LCL or Full container load (FCL). In cases where products are transported by air, the cost would be higher and if it is transported through LCL, the cost would be lower but you also have to think about transit time. The transit time for LCL is longer and the transit time for moving by air is smaller.

When you’re determining distribution costs, you need a comparative analysis between product demand and transport cost. If a product is urgently needed and the shipper is losing sales due to it,  that’s going to be a scenario where we would likely pay the additional expenses so we’re not worrying about stock outs.

If it costs $10,000 to ship your products, but you’d lose out on $40,000 in sales if you didn’t, which is the greater expense? Empty shelves, right? When you’re thinking about distribution expenses, you have to weigh out everything and come up with the best game plan for your current situations.

Choosing a POS is never an easy decision. With so many POS solutions on the market, it can be a challenge to just pick one. The only thing you can do is evaluate those point of sales systems and choose the one that you feel would be best for your business.

Once you have your POS, the real fun begins, how can you use your POS to collect data and utilize that data to make better business decisions? Let’s talk about those key business decisions.

Decisions Based On Data

Every great business makes decisions based on fact, based on data. If you want to grow your business, you need to know how to collect that data and analyze that data. When you do, your POS data can give you a specific roadmap to follow. A point-of-sale system can be way more than just a way to take payments from your customers. The problem, few business owners are taking advantage of this data provided by their integrated POS.

How Is POS Data Collected?

There’s really two main ways data is collected from customers online. The first way is through your POS system. This type of data collection is called passive data collection, meaning the customer doesn’t have to take action as the POS is what collects the data. This could be anything from information about repeat sales, time of sale, merchandise purchased and even geographic location and demographic data.

We can use passive data collection in a variety of different ways, such as “building a user profile based on their past behaviors with the company or on a company website.” Passive data can also include analytics provided about how much a customer uses a company website;

• Most visited pages
• Average time users spend on a page
• Path to purchase
• What date and time purchases took place

While users, clients or customers may not be taking “actions” on your website, there’s still a lot of different data points you could be collecting. Collected data can be used to implement growth strategies. Data can be used in search engine optimization (SEO) to help your website listings rank higher in Google. Data can be used in your search engine marketing to see what type of keywords are bringing a positive ROI.

Now, active data collection is the complete opposite of passive data collection. Active data collection refers to a customer or user that has took a specific action on the website to provide you with more information about them. This specific data collection can also be managed through the right POS, depending on where users are in the buying cycle.

One of the most common examples of this would be a lead magnet, placing a form on your website that allows users to sign up to an offer or a newsletter. In this case, a user may give you their email, phone number or name in exchange for something. Another example of active data collection is a survey, which are often more useful as you’re collecting specific feedback from the questions asked.

POS Data – How Can I Find It?

Every time your POS is used, many data points are created, giving you a profile of data about a particular customer. There’s a number of different data points you can collect;

• Customer purchasing habits
• Specific products a customer likes
• How often a customer buys from you

While each business and industry will differ on the exact data collected, understanding POS data is one of the most important first steps you can take to leverage it to fuel the growth of your company.

Point of sale data is collected when a transaction occurs. On a small scale, this includes any checkout at a retail store, handheld POS hardware, QR or barcode scanners from apps.

On a large scale, data is collected from groups of retailers, like your ecommerce stores in a specific niche, category, shopping mall data, or even geographical data. A cash register for example, is a micro level data gathering tool in the macro level that is your whole business – this is where multichannel ecommerce is so important and can provide so much more relevant data to help business growth. POS software within POS hardware is where the data magic really happens.

If you’re a small retailer and own a single online store, you won’t need the most sophisticated POS system to get a lot of useful data. It’s more important to choose a POS system that works best for;

• Your specific type of business
• Your specific business goals and needs

POS solutions can differ in a number of different ways, so you’re going to have to choose a POS solution that would;

• Terminal POS – Hardware and software solutions that may include barcode scanners, cash registers and app scanners.
• Cloud-Based POS – online POS systems, often used in conjunction with existing hardware like tablets or computers. Heavily utilized by online stores and ecommerce websites.
• Mobile POS – normally used as payment processing systems, usually adopted by small business owners

The most important aspect with regards to data collection will be that you are able to access the data in a granular and easily readable format.

Why Is POS Data So Important?

Sure, POS data is important but it’s also essential to your success. It is literally the point at which your data collection starts and the foundation for any other data that you collect, no matter if that’s passive or active.

There are many examples as to why POS can be a critical tool for your company to be successful, the most significant of which is inventory management. To run a successful business, you need to know what you are selling. You can’t effectively manage inventory if you don’t know what customers are buying.

You can’t provide your customers with what they want if you don’t know…. well, what they want.

Thankfully, we have our POS data to tell us just that. But isn’t POS data hard to analyze? How can you begin to analyze your POS data to make the right decisions? This is where Accelerated Analytics can help you as POS reporting is what we specialize in. Our POS reporting software takes all your POS data and implements it into an easy to use/read POS report.

If you want to see how this works, we’d love to show you our POS reporting software. Just click here.

Your POS data does you no good if you’re not using it. Too many business owners and executives are leaving big money on the table because they’re not taking a little bit of time to analyze their POS data. Don’t let a few minutes of time each day cost you money, jump on a quick call with us and we’ll show you everything you’re missing.

You could be sitting on a gold mine of data and not even know it!

We touched on how important inventory data is to operating a successful business and helping you make decisions on products. For retail stores, POS data can provide data insights to help you increase foot traffic to your stores. In fact, there’s a wealth of information your POS data can help you with.

Marketing Data is Key

If you don’t know by now, marketing is the key to successfully growing your company. POS data can give you vital insights and information on successful marketing promotions. It can give you data about your specific promos and how they can be improved. It can be used to split test two different landing pages to see what converts best.

Marketing data is essential to your success, we hope you’re using it to make the right decisions and constantly improve your marketing.

With all this data in hand, combined with your POS data, you’re going to get the roadmap to follow that will allow you to make key decisions that will drive sales and growth. If you’re not using it, you’re already behind your competition because more than likely, they’re using it to outpace you.

Customers Are The Most Important Data

Every time you make a sale, your POS system records information about your customer. When a customer buys multiple products, you begin building a history profile that adds more data. This data allows you to engage with your customers at the point of sale.

Why is that important? We want our best customers to buy more, when we know exactly who they are, it allows us to build promotions that will turn your best customers into better customers. We can use rewards and loyalty promotions to reward your best customers.

In other words, POS data can help you create personalized customer service strategies and marketing promotions for individual customers! That is powerful! That is leverage!

It can also help us forecast future demand and sales. It can help us see trends line and help us prepare for holiday sales. Demand forecasting has real important implications when it comes to inventory management. What’s your biggest expense at this time? For 80 percent of you and more, it’s……. “inventory.” How important is demand forecasting? VERY!

You Have Data…. Now What?

We know it can be overwhelming to look at your POS data and think, “where in the world do I start?”

That’s why we’re here.

If you’re serious about making your POS data work for you, reach out to us and jump on a call with our team.

Beginning inventory is known as the recorded cost of inventory in a company’s accounting records at the start of any particular accounting period. The beginning inventory is the recorded cost of inventory at the end of the preceding accounting period, which would then carry forward to the start of the next accounting period.

Beginning inventory is classified as a current asset as it’s an asset account. It usually doesn’t appear in the balance sheet because the balance sheet is created as of a specific date, this is usually the end of the accounting period, so the ending inventory balance appears on the balance sheet.

Now, beginning inventory is the same as ending inventory from the preceding accounting period, so it will appear in the balance sheet as the ending inventory. The main use of beginning inventory is to serve as the starting point of the cost of goods sold calculation for an accounting period, for which the calculation is:

Beginning inventory + Purchases during the period – Ending inventory = Cost of goods sold

While COGS is the priority reason we use beginning inventory, another use of beginning inventory is for the calculation of average inventory, which is used in the denominator of a number of performance measurements, such as the inventory turnover formula.

These measurements can use just the ending inventory figure, but using the beginning and ending inventory balances to derive an average inventory figure for an accounting period tends to generate a smoothing effect that counteracts an unusually high or low ending inventory figure.

When tracked and used correctly, retail analytics can be a game changer for your retail business. You already know how important it is to track your key retail KPIs. You should also know how important it is to have POS data and POS reporting. You should also know how key retail inventory management is. We all know this, but can retail analytics be used to build customer trust? YES!

Tracking Inventory To Drive Sales

SKU-level inventory is a key retail metric. If that item is out of stock, your customers can’t buy it.

We can help you monitor your inventory levels at retailers, so you know when to reorder merchandise.

You also have seasonal trends you have to watch carefully. With Accelerated Analytics, you’ll be able to see your inventory moving in real-time. You’ll be able to track sales over multiple store locations, ensuring you always know what’s in stock.

Driving Growth And Sales

If you want to better equip your sales teams with insights on sell-through and inventory, you need that retail data to give them.

This data-driven culture can help develop trust with your company’s retail customers, driving confidence and acceptance of your sales proposals.

When you have this type of data in hand, as long as your analyst can read the data, it will give you the roadmap you need to make decisions. Your data will never lie to you.

Customers Can Change Roles

Customers are finding new companies and leaving other companies all the time.

With the right retail analytics in place, we can get to know customers on a personal level. We can see what products or SKUs they have an interest in.

These types of data insights are priceless.

POS

If you’re only using your point of sale system to ring up sales, you’re definitely missing out. Our POS reporting solution comes with some amazing reporting features that tracks important metrics such as profit margins, basket sizes, customer counts, sales trends and more.

Here’s a good example, take a look at a sales reports and it will tell you exactly which products or suppliers are driving revenue so you can plan your stock orders as needed. That’s power retail analytics.

This is one of our customer’s favorite features. You can do sales reports by day, hour, month, specific period, even by supplier.  This allows you to accurately forecast for next year. You can plan staff rosters and product ordering in advance. It saves you time, money and effort. You only order what we need and what you know you’ll sale.

What about having the right data will help you serve your customers better? For example, take a company in the DIY hardware space. Wouldn’t it be helpful if you knew the specific brands and products customers were looking for? It gives you the opportunity to make their experiences better by offering them promotions or content based on their preferences.

This is really where data makes the difference. You know more about your customers and their spending and shopping habits and you can go one step further to build a relationship with them.

You can also use your POS records can help you streamline your staffing and operations.

You can use information from your POS system and sales receipts to staff your store appropriately or make adjustments to your store hours. You can also use this data to plan for seasonal fluctuations in sales, helping you manage cash flow better.”

Clearly, retailers can learn a lot about their business and customers simply by looking at their POS data.

If you want to see how our POS reporting can power your growth moving forward, click here. We’d love to chat for a few minutes and show you first hand just how powerful your POS data can be.

Having the right inventory management software is vital to all retailers, both small and large. With so many different inventory management software solutions on the market, it can be tough to figure out exactly what you’ll need. In this guide, we’re going to be discussing what benefits you’ll receive to once your inventory management is streamlined.

Automated Inventory Management

Most retailers don’t have the time, resources and capacity to always count inventory manually. This is where inventory management software can help.

It can allow you to maintain accurate stock counts, reduce errors, and avoid time consuming manual entry of items, location bins, pick orders, and inventory receiving. Real-time inventory reports allow you to compile and analyze essential data, like transactions by site or warehouse, itemized inventory levels by SKU, or individual customer purchase order history.

Automatic low stock level notifications ensure you will never lose out on another sale due to stockouts. Set automatic re-order points down to each bin location and preferred vendors for each inventoried item.

Know Exactly What’s In Stock

Do you know exactly what physical products you have in stock right this very minute?

The last thing you want to do is stop your warehouse activity to find out. Selling products that are out of stock can be very harmful to a business operating today. A few angry customers can take to social media with their frustrations and the next thing you know, all hell is breaking loose.

On top of that, customer support is going to get slammed and tie up the phones. The warehouse team will be scrambling to find these “hidden” items and you’re not starting to get the picture of why “accuracy” is key.

Knowing what products you have in real-time is key to making the right decisions later, such as reordering points, forecasting, picking list and safety stock.

Order Filling Accuracy

How accurate are your fulfilled orders?

The right inventory management software can help you fulfillment, ensuring orders are accurate and being shipped to the right addresses.

Most customers are not going to take a second chance on a company that shipped the wrong product or shipped to the wrong address. This is exactly why you need order filling accuracy.

Order accuracy is much more than just shipping to the right address, the picking better be accurate too. Stock should be positioned strategically too.

On-Time Orders

Are your orders being sent on-time?

With options such as Amazon Prime, customers expect to get their orders fast.

We always recommend having multiple shipping options for your customers, this often leads to higher conversion rates too.

You always want to deliver on your shipping promise. If you promised the customer they’ll receive the order in 2 days, make every effort to make it happen.

Inventory Turnover

How long are you holding inventory?

Slow inventory turnover can cost your company a lot of money.

Without inventory management software, you may not know to what extent. If you’re tracking inventory manually, you’ll have to do a count to know for sure.

The goal is always a quick turnover with inventory.

Stock Losses

How much stock have you lost?

Stock that is not moving harms your business.

You should always be monitoring your stock value and write-offs.

You want to move dead stock as quickly as you can.

POS Tracking And Reporting

If you know how important data collecting is and tracking your retail KPIs, you’re going to want to make sure you’re also using POS data.

Accelerated Analytics is one of the global leaders in POS Reporting and EDI 852.

The decisions you’re making for your company will always influence your success or failure. Why not be equipped with the most accurate POS data you can have so you can make accurate decisions?

Our POS reporting software is powerful but easy to use. We’d love to show you some screenshots and how we can help your company. If you have a few minutes, get signed up here and we’ll show you everything.

Have a question? Want to talk on the phone? You can reach us during business hours at 941-746-2073.

Cloud-based inventory management is the monitoring and maintenance of a businesses’ inventory levels using online software. With a cloud-based inventory management solution, it helps businesses avoid many of the errors and issues that plague traditional methods of measuring stock levels. With this type of inventory management software, you get a system that seamlessly tracks inventory coming in and going out of your business.

Traditionally, inventory management is often one of the most time-consuming and least popular tasks carried out by ecommerce businesses to keep their business running. Counting inventory can be daunting, especially when you don’t have the right tools for the job. Also, inventory is usually a businesses’ top investment, so it takes away from other areas of your business that may need financial resources.

On the other hand, Cloud-based inventory management makes everything easier, more effective and more efficient. It allows a business to gain back resources and times, Cloud-based stock management systems also reduces human errors.

Why Is Cloud-Based Inventory Management Important?

When it comes to inventory management, it pays off to be accurate, efficient and timely. Stock is the lifeblood of your business so maintaining the right stock levels is vital to your operations. Making the shift to a Cloud-based inventory management system is important for several reasons:

(1) Reducing Errors

One of the biggest benefits of using Cloud-based inventory management is the reduction of errors and mistakes. Thanks to the automation and accuracy of the software, it means that inevitable human errors are going to be eliminated from the equation. Furthermore, thanks to the Cloud-based apps, you can get immediate real-time updates on all of your stock levels. In short, it saves you time, money and effort.

(2) Instant Stock Level Updates

These cloud-based systems can accurately tell you just how much stock you have on hand. While that’s super important, Cloud-based inventory management software can also knows if you have enough stock for your demand forecast or whether you need to order more. You always want to avoid stockouts as they cost your company money and reduces customer satisfaction.

(3) Automated Processes

A Cloud-based solution allows you to automate the supply chain so that the execution of an order, from stock reaching its reorder point to creating an order and sending it to the supplier, many components can be done without involving humans. These automated processes allow you to focus your time, effort and energy elsewhere.

(4) Safety And Security

Safety and security are always 2 priorities for every business, which is another added benefit for using the Cloud. You don’t want your data in the wrong hands, you also want to make sure that data is never lost. With the Cloud, all of your data is kept remotely. When you make changes, they’re saved instantly. You do want to make sure you choose the right provider as they’ll be responsible for the security of your software. Even so, cloud technology is always evolving and protecting you from cyber attacks.

(5) Reporting And Analytics

Demand forecasting is a tricky part of business and something all ecommerce businesses need to be familiar with. Having the ability to know how much stock you need to order or figuring out what stock you’ll need for the holidays are essential skills that are priceless. Cloud-based inventory management systems analyze your data and create automated reports so you can make data-informed business decisions.

Here at Accelerated Analytics, our clients leverage the Cloud too, we have POS reporting and EDI 852 software. These integrate with your point of sales systems so you can get real-time data on sales. With cloud inventory management and POS data, you’re going to have essential data that will allow you to grow your business.

(6) Collecting Historical Data

We know first hand how important data is for your business. As long as you’re collecting the right data, it’s going to give you all the insights you need to make meaningful decisions in your business. Furthermore, Cloud-based inventory management allows you to link stock levels with your eCommerce store, accounting software, 3PL providers and much more.

How Cloud-Based Inventory Management Software Grows Business

Cloud-based inventory management software is efficient and effective, allowing you to manage inventory on the go and eliminate costly stock errors and mistakes.

The right Cloud-based inventory management software knows the demands of today’s fast-paced business world and puts the data you need right at your fingertips. In a few short seconds, you can log in with your mobile device or tablet to;

• Complete Audits
• Create Stock Reports
• Perform Stock Takes
• Review Stock Movement

As well as saving you time, Cloud-based inventory management software effectively manages your inventory to reduce errors and prevent stock from going missing. It allows you to move away from manual spreadsheets and the errors that come with manual data entry.

When you accompany a powerful Cloud-based inventory management and POS data solution together, you’re going to have the right data in your hands to make the right decisions for your business.

As a retailer, doing physical counts of inventory is likely one of the most annoying task you have to do. It’s a tedious task, counting store merchandise can take several hours, and for some merchants, it may require closing the store down for a period of time.

While it’s likely not a job you’re fond of, taking a physical count of inventory is vital for any retailer. Keeping a close eye on the stock you have on paper vs. what’s actually in-store enables is key to efficient retail inventory management. It allows you to maintain inventory accuracy, spot causes of shrinkage early, and ensure that you always have the right amount of stock at the right time.

What Is A Physical Inventory Count?

A physical inventory count is the practice of counting your retail products in person. The process typically involves a retail staff member (or team of workers) going through the retailer’ sales floor and stock room and counting each item. The data is then recorded either manually, using pen and paper or electronically using a mobile device.

To objective of a physical inventory count is to audit a store’s inventory and ensure that the stock data the retailer has on paper matches the inventory that’s is actually in the store.

To help make this task easier on you, we’ve compiled a few practical pointers on establishing your physical inventory count process, conducting stock counts, and more.

(1) Physically Counting Inventory

If you’ve never heard of cycle counting, you may want to look it up, it’s an effective way to count inventory.

This process refers to partially counting merchandise on a regular basis so you can monitor stock levels without disrupting your store hours in any capacity. Cycle counting can be done daily or weekly (usually before the store opens) and can free you from having to do full inventory counts. Most retailers will tell you this is the most effective and efficient way to count inventory.

On the other hand, if cycle counting isn’t your cup of tea, or if you feel that you have to do a full inventory count in addition to partial stock takes (as some retailers do), the tips below should make your life easier:

(2) Use Inventory Scanners And Stock Counting Technologies

Traditional retailers would do their physical inventory counts with a pen and paper. They would use an inventory count sheet to add up their products and later enter the data into a system.

Even with all the advancements in technology, some retailers still use this old school inventory counting. While this inventory counting method can get the job done, it’s highly inefficient and it requires double entry. If you have a small retail store, an inventory count may not take long at all. However, if you have thousands.tens of thousands of products, you need a more efficient way to count merchandise.

If you’re using a POS or inventory management software, you may find that they have an inventory counting feature. Here at Accelerated Analytics, our POS reporting solution has an inventory counting feature. If you want to learn more about it, be sure to schedule a demo.

(3) Schedule Inventory Counts Ahead Of Time

When you choose to count your inventory matters, so you should be thinking ahead, what data and time is going to be best fore the company?

As for the recommended when and how often, it really depends on you. Some stores count merchandise once a year, others conduct it on a bi-annual basis, while other stores use cycle counting and counting inventory regularly.

A lot of retail gurus claim that the last weekend of January or at the end of July is the best time to count because your SKUs are potentially at their lowest during these periods.

What ever you decide on, you’ll want to settle on a date well in advance (weeks or even months before) and make sure your employees know what’s coming up. At this stage, you need to take down the names of the people who’ll be helping you with your physical inventory count. Make sure they can make themselves available on the decided date.

Ideally, you don’t want to interrupt store operations, so schedule your inventory count after business hours or early in the morning. If you do have to shut down, make sure customers know well in advance.

(4) Labeling Boxes And Shelves

You always want to label your boxes and shelves. If you’re doing a physical count of your inventory, be sure your stockroom is properly prepared.

If the area is cluttered, stray pallets here and there, it’s going to cost you more time, effort and money. If you do need a new location for your count, put everything in a well-marked and defined place, and leave it there.

You also need to make sure everything is where it needs to be. Walk around the store or stockroom and keep an eye out for items that aren’t in their proper place. Are there tank tops lurking in footwear section? Did someone mislabel a box of merchandise? Be sure to correct these issues before you begin counting.

(5) Map Out Your Store

One of the best things you can do is building a map of your store and stock room that illustrates exactly where your products are located.

This will give everyone a clear idea where items need to be placed or where items can be found. It’s going to make it easier for you to assign people to different sections so you can determine the best way to go about the counting process.

Your map also serves as a checklist when you begin counting your products. You can mark off each section as it’s counted and completed.

Plus, if you do have new employees, they have a map to follow without having to ask someone every few minutes.

(6) Choosing The Right Team

Companies have a lot of different strategies as it pertains to choosing the right employees to count inventory. We do recommend that you don’t assign inventory counts to just any employee. The employees that are going to be doing your stock counts should be experienced. Now, we do recommend having new employees in your rotation.

Your most experienced employees should be familiar with your policies and the locations of different items. Still, you want to introduce new employees to learn this process.

You do have the option to hire 3rd party inventory counters. If you don’t have the in-house experience or resources, you may want to consider doing that. If you do plan to hire a 3rd party, make sure you do your research.

(7) Post-Inventory Count

Once you’ve completed your counting, this is a good time to improve your processes and ensure your count was accurate.

• You always want to double check your counts. Once you’ve counted items, make sure you immediately count it again.
• Keep your inventory reports close. Where was you right? Where was you off? What can be done to improve accuracy?
• Compare multiple inventory count reports.
• Compare past inventory count reports. Are discrepancies decreasing over time?
• POS reporting and retail analytics can make the process easier and more efficient.
• Identify high-risk zones

The stocktaking process refers to the processes and procedures that are being used when new stock arrives to your business. Performing a complete stocktake a few times a year is essential for maintaining optimal inventory levels and minimizing losses in your retail or wholesale business. Yes, it can be time-consuming, frustrating and a pain in the butt, however, it needs to be done.

The last thing you want is errors, whether that’s over counting or undercounting, it can cost you money and it can cost you customers.

You need a stocktaking process that’s efficient, accurate and fast. It’s a key pillar to efficient retail inventory management.

Having the right stocktaking process structure in place is important so employees and managers can follow your plan together.

A well-structured stocktaking process will include all the steps required to keep your staff working efficiently to uncover discrepancies and inaccuracies while keeping them engaged and focused.

Let’s take a look at ten key steps that will maximum your effectiveness for stocktaking.

(1) Schedule Stocktakes At The Right Time

You need to make sure you’re scheduling your stocktakes at the right time for your business.  If your stocktake is a lengthly process, you may want to consider doing it a slow sales cycle or outside of your normal business operations. Every industry is different, that could mean the summer for you, it could mean the winter for others. Find the right time.

(2) Have Your Stocktaking Tools Organized

Prior to starting your stocktaking process, everyone needs the right tools to get the job done right.

Here’s some of the most common tools for stocktaking.

• Pens
• Calculators
• Write-Off Sheets
• Stock Sheets
• Clipboards
• Handheld Scanners
• Mobile Devices

(3) Clean and Organize Your Stockroom Before Performing Your Stocktake

While this is an obvious one, how many of you know you have dirty, unorganized stockrooms right this minute?

A clean and well-organized stockroom will make it easy to find and count your stock to reduce the possibility of miscounting.
Another measure you could take to make the stocktaking process more efficient would be to create well-defined sections by labeling the shelves that stock is and should be stored on, along with using package labels that clearly identify what’s inside the package.

(4) Always Count Everything (Open That Box!)

You should never just assume an item is in the box. It doesn’t matter what that box says, open it and count it! Mistakes and errors happen, small mistakes add up over time. Plus, if you’re not responsible for missing items, why would you take fall?

Open every box and count all of the contents inside, make sure that amount is accurate.

The focus of your stocktaking process should be to get to 100% accurate readings as possible, so never assume or never guess. Always make sure you’re recording discrepancies on your stock sheet as items are counted. You should also record mislabeled/packaged boxes for quality control.

(5) Only Use Up-To-Date Inventory Data

The priority goal of a complete stocktake is to get an accurate count of the inventory you have and compare it to the existing inventory data you have.

You do want to make sure you’re excluding raw materials not in your inventory system, as well as invoiced orders that haven’t been shipped yet.  Processing materials that haven’t been added into your inventory management system is a separate task that doesn’t need to be done during a stocktake.

(6)  Define The Goals and Responsibilities

Most stocktaking processes will be overseen by a supervisor. Your supervisor should have a list of what needs to be counted and what should be in their warehouse so they can double check work done by your stocktakers.

Supervisors should make sure there’s no distractions. Employees shouldn’t have mobile phones out, it’s obvious we know but it happens.

Your stocktakers should know what groups they belong to, how they will be counting stock and what tools they need to get the job done.

If stocktake is going to last a long duration of time, make sure you give the team adequate breaks. You may also want to consider working stocktake in the mornings as most people do their best work early.

(7) Value Your Stock Correctly

Once all of your stock has been counted, make sure you have the most up-to-date prices for all of it. The price of your stock should match the market clearing price or the price that consumers are willing to pay for that item. Now, don’t forget to include depreciations.

For example, if you purchased a certain raw material last year for $3,000 but now it is only valued at $2,250 then you need to change prices to reflect the lower price, the same goes for older products you’re now selling at a discount.

(8) Know What Stock You’re Counting and How You’re Counting it

It doesn’t matter how big your warehouse is or what inventory you’ll be counting, you need to let your stocktakers know what sections they’ll be counting and in what order. Once you know that, you can give them a clear system to follow.

Here’s an idea for how to organize the actual counting part of the process:

• Each unit will be in 2 groups, one group inspects stock and the amount, the 2nd group would record and double check.
• Make sure sections don’t overlap, each stocktaker should have a dedicated area.
• Make sure stocktakers are counting the same way, this could be right to left, left to right, bottom to top, top to bottom.
• Mark stock that has been counted with a highlighter so you clearly know visually what’s been counted for.

(9) Slow-Selling Inventory, Damaged Items And Holding Costs

Anytime you do stocktaking, you may find items you thought were in your warehouse are actually missing. You could also find some items that have been damaged or spoiled, but never reported.

You also may find that there’s a few items that are not selling well, perhaps not selling at all. Inventory hold costs can quickly add up.

With these types of insights, you can begin thinking about how you can make your warehouse more secure. This may be a good time to implement additional procedures so you can avoid missing or damaged items in the future.

We’re all aiming for efficient inventory management, so creating a plan of attack for optimizing the inventory in your warehouse is essential.

(10) Always Improve Your Stocktaking Process

It can take time to get your stocktaking process dialed in. Remember, when errors are made, it gives you the opportunity to improve the processes.

If you’re struggling to keep up with sales and inventory, you need to check out our POS reporting software. It’s going to allow you to make quicker and better informed decisions.

We get it, inventory control over multiple locations can be a challenge. This is why you need the right tools to the job.

If you want to see first hand how our POS analytics are helping retailers, schedule a demo here. If you don’t take action, you’re never going to see the results you could see when you have the right data in hand to make key business decisions that are going to allow your company to thrive.