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19 Ways to Improve Your Ecommerce Warehouse Inventory Count

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19 Ways to Improve Your Ecommerce Warehouse Inventory Count

In most merchant businesses, inventory is the main balance sheet asset. Accurate inventory is necessary not only to provide prompt and excellent customer service, but also to correctly assess profitability.

The practice of performing a physical inventory count once or twice a year to correct on-hand counts per SKU is time-consuming, costly, and inconvenient because it halts all production.

Theft, inadequate inventory methods, faulty systems, a lack of cycle counting, and a lack of thorough barcoding are all causes of shrinkage.

Cycle counting is a procedure used by larger corporations. Cycle counting is a method of inventory auditing that involves counting certain objects or locations on a recurring basis. 

a) cycle counting was proven to be accurate

b) cycle counting was proven to be accurate, some companies shifted away from physical inventory.

Internal and external auditing, as well as finance, provide signoff.

The Physical Inventory Count Process Must Be Strictly Controlled

These 20 actions will help you improve the accuracy of your physical inventory count:

1. Counting large stocks takes one or two days. They should be planned well ahead of time. Assign captains and walk new employees through a mock counting process, including the protocol and how it's done.

If you don't have barcodes, assign associates to count specified bin/slot locations in pairs, with one counting and the other documenting. Employees with prior experience should be paired with newcomers.

2. Prepare ahead of time by mapping out the facility and assigning precise bin/slot positions to the counting teams. It's a good idea to check ahead of time to make sure specific bin/slot locations have what the inventory system says they should have.

3. Get rid of any unsaleable or defective merchandise ahead of time: This will free up some space as well.

4. Clear as many returns as possible: This decreases the amount of counting that needs to be done. Ascertain if the buyer has received consent from the vendors.

5. Slow-moving bulk inventory should be tallied and "frozen" ahead of time, shrink wrapped, and labeled with an inventory count ticket that includes the date, item/SKU, short description, count, and associate's name.

6. Ship all open orders before the inventory count: If orders can't be chosen, packaged, and shipped before the count, don't process them until after the count.

7. Suspend all usual operations: In larger cities, this may be challenging. All in-progress transactions, such as receiving, stock transfers, picking, packing, shipping, and refunds, must be cleared.

8. Use a "blind count process" for SKUs with quantities and dollar values that aren't visible to the counters. Teams may be tempted to rush the procedure and not precisely count the goods.

9. Make IT staff available for system issues, such as device issues, data communications, and so on.

10. Calculate inventory shrinkage once the counts have been completed and the system inventory on hand has been compared. Calculate inventory shrinkage by comparing current system stocks to SKU counts.

11. Carry out quality control counts. This should be done after the counts have been processed and compared. While the teams are still in the building and available, have an experienced team conduct a post-audit follow-up. 

Follow-up counts should be done instead of a thorough second count. A combination of the following factors can be used to make a decision: Randomly; follow up on inexperienced teams; in items that have a history of being problematic.

12. Provide food and drink: Keep the count teams engaged, fed and watered!

Other Important Methods for Improving Inventory Accuracy

19 Ways to Improve Your Ecommerce Warehouse Inventory Count

Here are a few more inventory counting best practices that we've discovered to be helpful. These are incredibly useful when it comes to auditing inventory issues.

13. Create a Department of Inventory

This feature may not be available in small-to-medium fulfillment facilities. Cycle counting, addressing warehouse back orders as they arise, adopting continuous improvement, and bin management are all responsibilities.

The inventory department should be in charge of discovering and implementing solutions to improve inventory accuracy and eliminate manual paperwork, as well as resolving back orders, reconciling systems, and detecting and addressing physical reasons of inventory shrinkage.

14. Cycle counting should be implemented

If you don't already employ cycle counting, make it a point to learn about your WMS's capabilities and make it a process improvement goal.

15. Secure Products with a High Value/High Shrinkage

Determine which products are likely to "grow legs." Create enclosed or locked areas with limited access. A daily physical inventory may be required in some high-value categories, such as jewelry.

16. Make use of barcode scanning technology

Manual count sheets are still widely used in many businesses. Implement barcode scanning to save time and reduce human mistakes. Smartphones and tablets may be turned into scanning devices for physical counts using software.

17. Consider using a service to count your inventory

Most businesses conduct inventory counts using their own employees, however this may not be the most reliable method. Some people aren't very organized or dependable when it comes to taking inventory, and they'll need to be paired with someone who is. 

Large-scale inventories, on the other hand, are costly. They also employ a SWAT mentality in order to get in and out swiftly.

18. Implement RFID

RFID embeds SKU identification into packaging to keep track of product location.

19. Make use of an audit trail for your inventory system

In two ways, newer inventory systems can improve audit accuracy through tracking:

  • Online inventory tracking by bin/slot location and product, as well as all transactions (sales, receipts, adjustments, etc.).
  • All inventory locations where goods are held are tracked by SKU.

While each of these best practices has merit and improves accuracy, they are most effective when used in tandem. Without full barcode implementation, maintaining high accuracy is challenging. Fast order turnaround and a stronger balance sheet require FC inventory accuracy.

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