Whether you're an apparel retailer, grocer, specialty store, or more, this is the season of the inventory. A great percentage of retailers conduct their annual or bi-annual inventories at this time, and unfortunately, most find themselves repeating small mistakes made in the past, which can add up to some costly consequences.
So what are the top inventory mistakes made, and how can they be avoided?
1. Inadequate Store Preparation
By and large, this is the most common mistake of all inventories, no matter the retailer. Preparing for an inventory goes far beyond ensuring that you have enough people to count. A few questions to ask yourself include: are your products priced correctly? Are you stores and racks well organized? Is all of your product out and available for counting? Have you checked your fixtures to ensure that no product is hidden from view?
Another sign of inadequate preparation is the lack of a floor or stockroom map which highlights the countable sections, and the order in which they should be counted in. While this may seem elementary, this small bit of preparation can save you hours of headaches down the road.
2. Inadequate Counter Preparation
Hand in hand with adequate store preparation is counter preparation. If employees (or outsourced services) responsible for counting the product were not appropriately trained on what they are supposed to count, and how they are supposed to count it, your inventory is almost guaranteed to be inaccurate.
Another common mistake seen is that oftentimes, management counts alongside employees (or the outsourced provider) in the effort to be helpful and the get the inventory done. However, store management is more helpful and effective when they allow their employees to conduct the initial counts, and instead resolve errors, verify counts, and mitigate other issues that come up during an inventory.
3. Lack of Early Audit Verification
Make sure that you have a process in place to check your counters at least an hour into the inventory process to review for errors, questions, or issues that might affect your count. This simple preventative measure could save you hours in recount time and money.
4. Lack of Preparation for Flash Inventories
For those retailers that conduct flash (or burst) inventories, it is crucial for accuracy that a clear cutoff date is established for the movement of inventory. Any documents pertaining to the transfer or shipment of inventory should be closed and resolved prior to the inventory, and should be available for the reconciliation process afterwards.
5. No Error Resolution During the Inventory Process
Errors, whether they're sourced to the counter, the product, or the methodology of the count, must be resolved prior to final submission of the inventory, even if they seem insignificant. Any discrepancy in the reported count versus the actual has the potential to cost hundreds of thousands of dollars in additional inventory purchases, etc.
6. Relying On Your Hired Service To Know What To Do
For those retailers who rely on outsourced services to conduct their inventories for them, we recommend to be as prepared as you would be with your own staff when handling an inventory.
For example, be sure to speak to your service prior to the inventory to confirm all logistical details, procedures for special circumstances and error resolution, and more. This is also the time to review any changes made to your inventory procedures since your last count with the service. As you are the most familiar with your product and store layout, the inventory service will only benefit from your input and guidance.
7. Not Controlling Your Inventory Environment
While most of us would prefer to conduct an inventory while the store is actually closed, it doesn't always happen that way. In any instance where an inventory must be conducted while the store is open, a control system should be in to account for items that have not been counted and have been sold.
8. No Bag Checks
This common procedure should be enforced during inventories, no exceptions. All bags, whether they're the belongings of internal employees or outsourced inventory personnel, should be placed in a central, visible area, and should be checked by management prior to leaving the building.
9. Incorrect use of Multiple Quantity Keys
While this point seems minute, it actually causes quite a few costly errors during the inventory process. For example, a counter keys a rack of multiple blouses to save time. While the final inventory will show for 20 medium-sized blouses, the actual inventory from that rack was 10 small blouses, 5 medium-sized, and 5 large blouses. This can cause costly issues with inventory and replenishment, which can easily be eliminated by simply barring the use of the multiple quantity key.
10. Not Resolving Unmarked Inventory
Last but not least, the resolution of what to do with unmarked inventory should be worked out prior to the inventory and communicated to the counters during their training process. To help manage errors, make a 'trouble area' somewhere on your store floor for unmarked pieces, and assign a counter to be responsible for the items on it.
Here are a few tips to help make your inventory a better process, every time around:
- Remember that inventory is truly an everyday event, not a process that occurs only once or twice a year. Help your preparation by keeping the stores organized, practice proper pricing techniques, and establishing a process for your counters.
- Procedures for your inventory process should be easily on hand (either through your inventory service or internally) for reference. These procedures should be reviewed prior to every inventory to ensure that it is still an adequate process for your stores.
- Always do a final walk-through of the store prior to closing an inventory.
- Always check the checker, or rather, always practice count verification.
- To ensure a smooth inventory process, clearly communicate the delegation of duties prior to the start of your inventory