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Inventory Best Practices
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an electronic spreadsheet for manual comparison to a computer-generated
inventory report. This approach allows the computer to automatically issue a
comparison of the counted quantities to the quantities already stored in the
computer, so that one can quickly determine where there may be counting
errors. Most good computer software packages contain this feature; if not,
one must evaluate the cost of programming the feature into the system.
• Identify all items in advance. A team should review the warehouse well in
advance of the physical count to spot all items that lack identifying part
numbers. By researching these items and correctly marking them in advance,
the counting teams do not have to address this task while also trying to count
inventory, thereby shortening the counting process.
• Only allow warehouse staff to count. Warehouse employees have an excel-
lent knowledge of all the parts stored in the warehouse and so are the most
qualified to identify and count inventory in the most efficient manner possi-
ble. If other, less knowledgeable people are brought into the counting
process, it is much more likely that there will be counting problems, result-
ing in wasted time at the end of the physical count, when extra counting
teams must be dispatched to research potential miscounts.
• Only conduct one count. Do not count something more than once! Though
some companies conduct a double count of all inventory items and then con-
duct a comparison of the two counts to spot errors, it is much easier and
faster to complete a single count and compare this to the book balances
already stored in the computer system. Conducting a double count adds to
the time and effort needed to complete the counting process.
• Precount the inventory. A team should begin counting the inventory days or
weeks in advance of the formal physical inventory count. This group’s job is
to gather inventory into single locations, count it, seal it into containers, and
mark the correct quantity on the containers. By doing so, it is much easier for
the physical count teams to complete their work in an efficient and accurate
manner. Though this may seem like a considerable amount of advance work
(it is), it results in a much shorter interval for the physical count, which
allows a company to be shut down only for the briefest possible time.

When these suggestions are implemented together or individually, a com-
pany will experience significant reductions in the effort needed to complete a
physical inventory, while increasing the accuracy of the resulting information.
For a more comprehensive best practice that entirely eliminates the need for a
physical count, continue on to the next section.
Cost: Installation time: