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  • Writer's pictureRoger Pujol

Inventory Counts: Preparation Tips

Updated: Dec 14, 2022


Single Counter

Inventory Count Preparation Tips

Below are general guidelines and tips for preparing a spot count, cycle count, or year-end physical inventory. These are generally for a bin-controlled manufacturing warehouse environment. Your counting environment will differ based on your industry, the nature of the items, the warehousing layout, and inventory management software.


1. General Housekeeping

Forklift & Racking
Above: A place for everything, everything in its place.

  • Tidy the warehouse to allow easy access, free movement, and easy counting of stacked items. All trash, excess packaging, pallets, and plastic banding should be removed from counting areas.

  • Aisle, rack, shelf, and bin locations should already be labeled. Update labeling if needed.

  • Remove items not to be counted from count areas, such as defective material to be returned to vendors, scrapped, awaiting disposal, etc. Ideally, these items should be in a virtual Material Review Board (MRB) location. Identify with a red 1” diameter round label.

  • Eliminate junk.

  • Ensure all areas are well-lit and accessible for counting.

  • Locate and stage equipment needed for the count, such as portable stairs, man-lifts, forklifts, etc.

2. Count Teams

two person count team
Above: Two person count teams are recommended for counts.
  • Count teams should be assigned and posted in common areas as soon as possible.

  • Only people knowledgeable about the counted items should be assigned the task of counting. Correct part identification is critical!

  • Count teams should be two people per team—one counting, one recording & verifying: switch places often. See our blog

  • Everyone involved in the physical inventory must receive instructions before counting.

3. Count Preparation


  • Obsolete and slow-moving items should be pre-counted, packaged, and properly labeled.

  • Bag & seal small items and attach inventory identification labels for an easy count on count day.

  • All identical inventory items should be grouped into a single location if possible.

  • Identify if multiple boxes are open for the same item. Consolidate items and seal remaining boxes. There should be only a single open box or bag with partials.

  • Clearly label all inventory items with the item number and UOM label for easy identification by count teams. Unit of Measure (UOM) is usually the most significant discrepancy during the reconciliation process. What UOM are we counting…Eaches, pounds, sheets?

  • Determine how Work in Process (WIP) material is to be counted.

  • Identify items not required for production or sales orders before the count. These items can be counted in advance and taped closed or shrink-wrapped—label with item number, UOM, count date, and quantity.

  • Dress Rehearsal- Walk the floor with the counting team to identify materials that will be counted on the count day. Check shipping & receiving departments for items and determine whether items in those areas will be included in the count.

4. Inventory Reports

count sheets
Above: Tags vs. Count Sheets.

  • Check negative on-hand quantities-Review any items that have a negative quantity in your inventory management system. For example, these items may have been over-sold, unreceived, or pre-billed.

  • Items with no cost- Everything has a cost. Identify all items in your system with a quantity on hand of one or more, but at no cost on file. Identify the correct cost and update the cost records before the count.

  • Incorrect bin locations. Bin locations may have been added by mistake to the inventory management system. Investigate how these bins were created and remove them.

  • If you will be using system-generated worksheets for your count, do we show the counters the quantity on hand for items being counted? See our recent post here blind counts or show quantity?

5. Supplies


Count Tag
Above: Two-part carbonless inventory count tag.

  • Using the tag method, 2-Part carbonless inventory tags Uline S-2937 0000-0499 Style Adhesive backed.

  • Color-coded circle labels 1” in Diameter. Uline Green S-2235GR (Counted) Uline Red S-2235RED (Do Not Count)

  • Blank sheets of paper.

  • Clipboards for each counting team.

  • Pens, markers, highlighters.

  • Binder clips for worksheets.

  • Counting Scales. Calibrated and fresh batteries.

  • Calculators.

  • Tape measures. (Calipers if appropriate).

  • Bagging supplies and bag sealing equipment.

  • Clear packing tape & handheld dispenser.

  • Box cutter.


Summary

In our Physical Inventory and Cycle Counting workshops, we teach best practices for warehouse organization and management. We aim to achieve the highest possible inventory accuracy while increasing overall count efficiency. The key to achieving this are preparation, organization, and training.


Roger Pujol is a business improvement consultant and 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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