Because inventory makes up more than half of your assets, Inventory control is a key component to running your business as lean as possible. Dynamic inventory management will maximize your cash flow provided that you are committed to managing the process. Sales, profitability and cash flow are directly related to the productivity of the inventory investment.

An important first step before you begin counting is to clean and organize all warehouses, trucks, parts bins and stores. Disorganization hides merchandise and can cause inaccurate counts. You will need to walk through your facilities and decide exactly how you want them set up, review it in detail with your staff, and schedule the time and personnel for the project.  If you are not directly involved in the cleanup, make sure that you consistently check in and follow up. Make sure all buildings and trucks are done the way that you envisioned before beginning the physical counts.

Typically, customers choose items from a selection of a category that you offer and your POS system has category reports so it makes sense to organize your warehouses by category, and where possible, numerical order. By grouping categories together your staff will also increase a daily efficiency factor because they will spend less time looking for needed merchandise and it will be easier for in-season cycle counts. Once you are organized, make it everyone’s responsibility to keep it that way.

While moving and organizing stock, make notes pertaining to overstock which will come in handy when deciding what not to order and what to clearance in the spring. This is a prime opportunity to make sure all defective merchandise has been taken care of with your vendors and all presold items are on order or tagged and set aside for the customers.  This is also a good opportunity to ensure you have the stock that you need that sells during the winter months.

Print a procedure for how you want the inventory done and have a review meeting with all involved staff so that personnel doing the counts are on the same page. You don’t want to have mistaken double counts or missed counts. Count by category and match your staff’s knowledge with them.  Make sure you track who does the count and the update in your computer system.

Note that above I mentioned cleaning in addition to organizing. Year end is, or should be, when you have the least amount of stock. This is prime time in warehouses, stores and vans for sweeping, using a shop vac around the edges and in the corners, wiping down shelves and washing out bins. A great jump start for the upcoming season.
Read our previously posted blog titled:

Make Year End Physical Inventory Less Agonizing