Inventory Counts: Blind Counts or Show Quantity On Hand?

Inventory counts should always be done with at least two counters per team.

During our inventory accuracy workshops, which concentrate on physical and cycle-counting, and in on-site training sessions, a common question arises when getting ready for inventory counts: "Should the worksheets or mobile devices used for counting display the on-hand inventory quantities?" The response is consistently, "It depends on the purpose of the count."

There are two distinct perspectives on this issue, each with its supporters and detractors. There's no definitive answer, just personal preferences. Nonetheless, all contemporary Enterprise Resource Planning (ERP) software systems enable users to select this rationale. Inventory counting is an activity that doesn't add value, and its primary purpose is to compare the physical inventory with the records in the computer system. There is no alternative if you use handwritten count tags instead of computer-generated count sheets. See our post on Count Tags vs. Count Sheets.

This post will discuss the issues related to letting counters be aware of the on-hand inventory balance during physical or cycle counts.

Blind Counts

A blind count involves listing items in your count selection without disclosing the quantity available. It includes the item and location details, but does not display the calculated or frozen inventory at the time of counting.

At first glance, this method of verifying computer inventory records by counting the items appears logical. However, the blind count presupposes that the counters might not be entirely reliable and could be tempted to record the visible quantities if accessible. The count organizer then matches the reported figures with the system records and examines any differences found.

The counters need to tally the items to confirm the quantity, which is the goal of the count. The only option is to count the inventory without a reference for the expected amount.

However, the counters are unaware of the expected inventory quantity, so they must rely on the current count. Essentially, there is nothing to compare it against. There is no motivation to search for extra materials if the count is low or to conduct an immediate recount if the count is high. As a result, the counters could turn an accurate inventory record into an inaccurate one.

Unit of Measure (UOM) errors are among the biggest causes of counting inaccuracies. When quantities are not included on the count sheets, the likelihood of UOM counting errors rises.

Pros:

• Forces a true physical count: Ensures accuracy and integrity of the data.

• Unbiased results: Especially useful when doing a full physical inventory or validating inventory accuracy for an audit.

• Reveals systemic issues: Helps identify processes or locations where shrinkage, miscounts, or misplacements occur.

Cons:

• Slower process: Counters may take more time.

• More variance checks: You’ll get more exceptions that might require follow-up review.

  
  

Blind counts will slow the counting process down.

Show Quantity on Hand

The main goal of inventory counts is not merely counting items but ensuring that the computer records align with the actual physical quantities for both financial and operational reasons. By showing the counters the data from the computer records, their task is to verify it, after which we make any necessary adjustments.

By displaying the quantity on hand, the counters can grasp what the inventory ought to be. More meticulous counters might remember items stored elsewhere and will persist until all items are found. Furthermore, counters will examine the shipping and receiving departments and the production floor to locate additional items.

There might be a temptation to perform a quick visual assessment. Consequently, items that are challenging to count, like the low-value barrel of bolts, might not be accurately counted. While miscounted items may not significantly impact inventory value, running out can halt production.

Pros:

• Quicker counts: Counters can focus on confirming the number rather than figuring it out from scratch.

• Helps catch obvious mistakes: If a counter sees a wildly different number, they might double-check before submitting.

• Useful in cycle counts: It's helpful to spot discrepancies quickly, especially when counting high-value or high-variance items.

Cons:

• Confirmation bias: Counters may write down the expected quantity instead of physically verifying.

• Inflated accuracy: This might give false confidence in the inventory data, especially if you’re trying to clean up known issues.

Cycle counts and spot checks often show the quantity on hand.

Recommendation

• Show QOH for faster counts, easier variance spotting, and cycle counting where speed and minor accuracy checks are the goal. However, this may introduce confirmation bias and reduce count reliability.

• Hide QOH for complete physical inventories or audits where accurate, unbiased counts are critical. This ensures a true physical verification, but can slow down the process and increase variance review.

Summary

We teach clients to perform counts using teams of two individuals. One person handles the counting, while the other records and verifies the count. The team members often alternate roles, which also helps with material movement. Using two-person teams decreases the chances of collusion to falsify count records. Deciding whether to disclose counts is a matter of preference, and we have observed success with both methods.

Are You Ready to Improve Your Inventory Accuracy?

Whether you're prepping for your annual physical count or fine-tuning your cycle counting process, how you design your count sheets matters. Take a fresh look at your approach—are you setting your team up for speed, accuracy, or both?

Let’s talk. Champion Business Solutions can help you streamline inventory controls and align your ERP setup with best practices. Contact us today to get started!

Roger Pujol is a business improvement consultant and the founder of Champion Business Solutions, LLC. He speaks and writes about encounters, helping small to medium-sized businesses (SMBs) improve their business operations.

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