How to take inventory in inventory management│Key points for implementing a system to improve efficiency
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"Inventory" is the process of checking the number of products in stock in a warehouse. By comparing the inventory on the ledger with the actual inventory, the accurate inventory status is checked and organized. In addition, inventory Evaluating the quality of inventory to confirm its value and reflect it in the company's profits and losses For these reasons, inventory taking can be said to be an important task not only in inventory management but also in business management.
In this article, Basic knowledge of inventory management and systems that help improve work efficiency This article explains the following. If you are in charge of management work, please read it for reference.
What are the methods and procedures for inventory counting?
There are two methods of inventory counting: "physical inventory" and "book inventory." Physical inventory is a method of checking the actual items at the storage location. Book inventory, on the other hand, is a method of recording in a ledger every time inventory is taken in or out. Here we will introduce the procedures for each method.
Procedure for conducting a physical inventory
1. Create an inventory plan
We will manage work schedules and prepare work manuals.
2. Decide on an inventory method
There are two methods: the "list method" and the "tag method."
*List method: This method involves counting inventory and checking it against the inventory numbers in the inventory management sheet (inventory list) that is used daily to see if the figures match.
*Tag method: A tag (label) with the name and quantity written on it is attached to each piece of inventory, and the number of tags issued is checked to see if it matches the inventory quantity.
3. Check inventory quantity and status
In addition to checking inventory, check for any damage or loss.
4. Check the discrepancies between the inventory results and the books and systems
If any discrepancies are discovered, we will check again to make sure there were no miscounts or duplications during the inventory process.
5. Identify the cause of inventory discrepancies and correct the books
Once you have identified the cause of the discrepancy in inventory, the process is complete. If it is unclear, you can deal with it by processing the books and work to prevent it from recurring.
Procedure for conducting book inventory
1. Every time inventory is received or shipped, fill out an inventory management sheet etc.
We use an inventory management sheet (inventory list) on a daily basis, and whenever the inventory level changes due to shipments or receipts, we record the quantity and status.
2. Check the stock quantity etc. based on the inventory management table
Check and evaluate inventory quantities based on the information listed on the inventory management sheet. Please be careful as any errors in the entry will cause discrepancies in the inventory quantity.
Generally, inventory is conducted once or multiple times a year. In industries such as restaurants and retail stores, it is often conducted on a regular basis, once a month. It is a good idea to conduct an inventory once before the fiscal year-end.
Valuation method for inventory inventory
Inventory valuation is the process of quantifying a company's asset holdings. The asset valuation of inventory is determined at the end of the fiscal year. In this case, assets are generally calculated by multiplying the total number of inventory units by the cost of sales. Here, we will introduce the valuation methods "cost method" and "lower of cost or market method."
Cost Method
This method calculates the valuation amount based on the acquisition cost of your company's inventory. There are several cost methods, such as the first-in, first-out method (which calculates based on the assumption that the oldest inventory is sold first) and the moving average method (which calculates the average unit price each time a purchase is made). While it is easy to calculate, the downside is that it can easily overlook valuation losses due to inventory deterioration or a decline in market value.
Lower of cost or market value method
This method calculates the valuation amount by comparing the valuation amount calculated using the cost method with the market value at the end of the fiscal year and adopting the lower amount. It has the advantage that it is easy to record valuation losses. Note that when valuing using the lower of cost or market method, prior notification to the tax office is required.
Common problems and solutions when taking inventory
When taking inventory, human error such as counting mistakes or input errors can cause discrepancies in the totals. Here we will introduce some points to be careful of when taking inventory and solutions.
Human error is the main cause of common problems
When inventory is taken manually, human error such as counting errors or duplication, or incorrect or missing entries on the inventory management sheet, can be an issue. No matter how careful you are, it is difficult to completely prevent mistakes when working by hand.
How to solve common inventory problems
Clearly define rules for inventory
It is important to create an inventory manual, disseminate it throughout the company, and thoroughly implement work methods that will prevent human error. Work that is left to the personal judgment of on-site workers can lead to mistakes.
Leverage systems and tools
Systems and tools that can make inventory taking more efficient include inventory management systems, barcodes, and two-dimensional barcodes. By utilizing these, inventory taking work can be automated, and human error caused by manual work can be reduced. Another benefit is that it reduces the amount of work required, which has the effect of improving work efficiency.
What is a system for efficiently taking inventory?
To streamline inventory counts, it is effective to introduce a dedicated system. Finally, we will introduce a convenient system that digitizes inventory counts.
A system that allows efficient inventory counting
The issue of inventory counting may be resolved by implementing the following systems.
・Barcodes and two-dimensional barcodes
Scan the barcode with a handheld terminal or other device to check the total number of items in stock.
・RFID (IC tag)
The tags are scanned in bulk via wireless radio wave communication to check the total number of items in stock.
・Inventory management system using smartphones
Scan barcodes in bulk using a smartphone app to check total inventory.
・AI camera
AI cameras constantly monitor the warehouse situation and automatically record data on incoming and outgoing goods.
・Weight sensor
The inventory quantity is automatically recorded based on the weight measured by the sensor.
How to choose systems and tools that will help you with inventory counting
Are the systems and tools right for your company?
Choose a system or tool that is appropriate for the items your company needs to manage. It's also a good idea to check that it will work with existing systems and formats used within your company. We also recommend signing up for a free trial to get an idea of what the work flow will be like after implementation.
Is the cost performance appropriate?
When introducing a system or tool, initial costs for the device itself and monthly usage fees will be incurred. It is important to choose a cost-effective product that can be introduced and operated within an appropriate range, taking into account the effect it will have on business efficiency.
Will operation of the system be a burden on the field?
Operating systems and tools that are difficult to use on-site can result in unnecessary time and effort being spent on work. When promoting digital transformation on-site, it is important to select systems and tools that are easy for any worker to use, taking into consideration the ease of use and the vendor's support system.
We recommend using a system to streamline inventory counts!
So far, we have explained inventory counts. There are two methods for inventory counts: "physical inventory" and "book inventory." Because manual work raises concerns about human error, it is a good idea to consider reducing errors by creating a manual for the process, or automating it by introducing a dedicated system or tool. The barcode scanning app "i-Repo Scan" not only efficiently counts inventory, but also helps prevent work errors. It can be introduced at low cost because an iPhone/iPad can be used as a handheld terminal.
[Efficient inventory management]
Reduce unnecessary work with the barcode scanning app "i-Repo Scan"!
- A dedicated function that counts all items on the screen at once greatly improves the efficiency of inventory work.
・No need for a handheld terminal. Because it runs on a mobile device, installation costs are 1/5 of what they used to be!
- The augmented reality (AR) function makes it easy to see any missed readings or whether the reading is correct.
Click here to download the materials for the on-site document digitization system "i-Repo Scan"
Download the Warehouse Management Manual "Preventing On-site Mistakes and Improving Accuracy" here
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