Running an ecommerce business? Then you know inventory is everything. But here’s the question: do you actually know how much inventory you have right now?
Many business owners think as long as they have enough products to sell, the exact count doesn’t matter. That’s a costly mistake. Accurate inventory counts can make or break your business success.
This guide will show you everything about inventory counting. We’ll cover the best methods, share proven tips, and help you avoid common mistakes.
What Is Inventory Counting?
Inventory counting is simple. You physically count every product you have in stock. Then you record those numbers.
Most businesses follow a structured process. First, they group their inventory by type or location. Next, they count each item one by one. Finally, they record the numbers either on paper or in a digital system.
This process helps you spot problems. Maybe your records show 100 units, but you only have 95. That’s a discrepancy you need to fix.
Why Inventory Counting Matters for Your Business
Think inventory counting is boring busy work? Think again. Here’s why it’s crucial:
Catch inventory mistakes early. Your computer says you have 50 units. Your shelf shows 42. Without counting, you’d never know about those 8 missing items. Regular counts help you maintain accurate records and make better business decisions.
Reorder the right amounts. When you know your exact stock levels, you can reorder just what you need. No more guessing games. This prevents both stockouts and overstocking situations.
Stop overselling disasters. Imagine selling a product you don’t actually have. Your customer gets frustrated, you lose the sale, and your reputation takes a hit. Accurate counts prevent this nightmare scenario.
When Should You Count Your Inventory?
There’s no one-size-fits-all answer. Your counting schedule depends on your business size and product types.
Small businesses might count monthly. Larger operations often go quarterly or twice a year. Some even count annually.
The key is timing your counts with your accounting schedule. You’ll also want to count before major events like sales or product launches.
Notice frequent stockouts or inventory issues? Time for more frequent counting.
4 Popular Inventory Counting Methods
Different businesses need different approaches. Here are the main methods to consider:
1. Full Periodic Count
This means counting everything at once. It’s thorough but time-consuming.
Most companies do full counts once or twice a year. You’ll need to dedicate significant staff time, sometimes even hiring temporary help.
Full counts work well for smaller businesses with limited SKUs. But they can disrupt operations for larger companies.
2. Cycle Counting
Cycle counting is smarter for busy businesses. Instead of counting everything at once, you count small sections regularly.
You might count one warehouse aisle per week. Or focus on all your clothing items on Mondays. This keeps operations running smoothly while maintaining accuracy.
Many businesses prefer cycle counting because it catches problems quickly. No waiting until year-end to discover issues.
3. Perpetual Inventory
This is the high-tech approach. Your inventory count updates automatically with every sale and purchase.
When someone buys a product, your system immediately subtracts it from inventory. Receive new stock? It gets added instantly.
Perpetual systems require investment in technology like barcode scanners and RFID tags. But they’re incredibly accurate and efficient.
4. ABC Counting
ABC counting focuses on your most important items. You divide inventory into three categories:
- A items: High-value products you count most often
- B items: Medium-value products with moderate counting frequency
- C items: Low-value products you count less frequently
This method lets you focus attention where it matters most. Your bestsellers get more attention than slow-moving items.
Best Practices for Accurate Inventory Counts
Want better counting results? Follow these proven strategies:
Organize Your Storage Space
A messy warehouse leads to counting mistakes. Here’s how to set up for success:
Keep each product type in its own area. This makes counting faster and more accurate.
Create clear pathways between storage areas. Your counting team should move efficiently from section to section.
Remove clutter and organize products neatly. Avoid stacking items where they might be missed.
Make sure all barcodes and labels are visible. Hidden labels slow down the process and cause errors.
Use Technology to Your Advantage
Manual counting with pen and paper is slow and error-prone. Modern inventory management software speeds up the process dramatically.
These systems track inventory movement automatically. Every sale, return, and restock gets recorded instantly.
Warehouse management systems like Waredock WMS add extra accuracy checks. They serve as your single source of truth for inventory data.
Implement Barcode and RFID Systems
Barcode scanning eliminates most counting errors. Your team scans items instead of manually recording numbers.
RFID tags take automation even further. Sensors can track inventory movement throughout your warehouse without human intervention.
These technologies require upfront investment. But they pay for themselves through improved accuracy and efficiency.
Common Inventory Counting Problems (And Solutions)
Even the best businesses face inventory counting challenges. Here are the biggest issues and how to fix them:
Human Error and Miscounts
People make mistakes. It’s unavoidable with manual processes.
Counters might skip items or enter wrong numbers. These errors create problems throughout your supply chain.
Solution: Invest in automation technology. Barcode scanners and automated systems reduce human error significantly.
Seasonal Inventory Surges
Busy seasons create chaos. Inventory moves fast, and organization suffers.
Holiday retailers know this pain. Stock flies in and out, making accurate counts nearly impossible.
Solution: Prepare for busy seasons in advance. Organize inventory before the rush hits. Consider hiring temporary staff for counting during peak times.
Limited Staff and Resources
Many inventory counts require your entire team. This disrupts normal operations.
Small businesses struggle most with resource limitations. They can’t afford to shut down for counting.
Solution: Use cycle counting instead of full counts. Implement automated systems that reduce manual labor needs. Even small operations can benefit from these efficiency improvements.
How Waredock Simplifies Inventory Counting
Managing inventory doesn’t have to be a headache. Waredock tools make counting easier and more accurate.
Real-Time Inventory Tracking
Waredock WMS integrates all your inventory data into one platform. It tracks stock movement throughout your warehouse with multiple accuracy checks.
The system updates automatically when inventory is sold, received, or returned. This gives you perpetual inventory counts without manual effort.
Automated Counting Solutions
Waredock scanner system captures inventory data automatically. Your warehouse staff scans items, and the system records everything instantly.
This eliminates manual data entry and reduces counting errors significantly.
Customizable Cycle Counts
You can customize cycle counts to fit your business needs. Focus on high-priority items or products with frequent changes.
This ensures accuracy where it matters most while saving time on low-priority inventory.
Smart Inventory Distribution
Waredock Inventory Placement Program optimizes where you store products. Their algorithm determines the best distribution strategy based on your actual sales data.
Inventory gets distributed across fulfillment centers for faster, cheaper shipping. This maintains optimal stock levels while reducing fulfillment costs.
Data-Driven Forecasting
Waredock analytics help you maintain optimal inventory levels. You get insights into sales performance and historical data.
Use these insights for demand forecasting and replenishment planning. This prevents both stockouts and overstock situations while making counting more efficient.
Frequently Asked Questions
What’s the best inventory counting method for small businesses?
Small businesses should use perpetual inventory systems with automation tools. This reduces the need to shut down operations while addressing staff limitations.
How often should I count inventory?
It depends on your business needs and chosen method. Most businesses count at least annually. Some perform cycle counts monthly for better accuracy.
What are inventory numbering best practices?
Keep numbers short but not so short they’re confused with quantities. Use capital letters to avoid confusion. Follow a consistent numbering system across all products.
How can Waredock help with my inventory counting?
Waredock provides real-time tracking and powerful WMS tools for unparalleled accuracy. The system automatically updates inventory records whenever items move through warehouse operations.
Ready to Improve Your Inventory Counting?
Accurate inventory counting is essential for ecommerce success. The right methods and tools can transform this tedious task into a competitive advantage.
Start with organizing your storage space and implementing basic automation. As your business grows, consider more advanced solutions like perpetual inventory systems.
Remember, the goal isn’t perfect counts every time. It’s building a system that gives you reliable, actionable inventory data to grow your business.
