With spring underway, some distributors may see this as an opportunity to perform a physical inventory count, especially if they didn’t have an opportunity to do so at the end of the prior year. Of course, physical inventory counts can be an extremely lengthy and challenging aspect to business. However, the process is a necessary aspect of operations With the varying number of different components in play – from the enterprise resource planning software recording the information to the employees on the ground floor counting everything either manually by hand or automatically with barcode scanners – there’s a lot of room for error. However, if businesses avoid these common mistakes, there will be fewer problems with inventory and productivity in the long term.

Not doing enough physical inventory counts
Because of the nature of the procedure, physical inventory counts are the equivalent of going to the dentist for many businesses. As a consequence, they avoid it as much as they can. However, this can cause significant accounting problems over the long term, as merchandise does move around on occasion, and certain unprofitable elements such as zombie assets and spoiled or obsolete inventory can accumulate quickly. While it may be a challenge, it’s essential for manufacturers and distributors to keep track of inventory with regular counts, according to Entrepreneur.

Lack of preparation by all stakeholders
When businesses don’t do physical inventory counts on a regular basis, they get rusty on the protocols that go with it. Moreover, there’s a likelihood that they will not have the same employees as the last count. With so many new variables in play, it becomes paramount that businesses take whatever steps they can to prepare their employees for the procedure, as noted by LP Innovations. Otherwise, there will be a very high risk if not guarantee of errors during the count.

Loss of environmental control
A lot of businesses tend to run physical inventory counts during off hours, either at night or on weekends to avoid miscounts due to merchandise movement. However, there are some cases where this is practically impossible, and even when it is possible, the warehouse isn’t shut down and secured for a proper count. That can cause significant accounting errors, even leading to ghost assets – inventory that is missing but still on the record. It’s essential for a business to at least implement a control system to ensure everything is in its right place during the proceedings.

No error resolution
During any inventory count, discrepancies become inevitable due to odd irregularities and the dated nature of the books being used. It’s essential, then, to address those issues before completing the procedure within the ERP software. Of course, that means creating a mechanism to address possible misalignments as they appear and reporting them through proper methods. Even a small mismatch between the reported and the actual count can cost a business a lot of money. ERP platforms like Microsoft Dynamics NAV have the ability to address this function by showing prior inventories for comparison.

A lack of automation
The most common form of physical inventory counting is manual counts done by employees on the ground floor. This is also the most error-prone method – since it’s most reliant on paper inputs and hand counting – and the slowest by far. If a company wants to avoid the tedium and mistakes that happen in manual counts, it only makes sense to incorporate some automation to the process through data collection. Barcode scanning is one of the cheaper methods of doing so. Instead of needing to count, verify and count again, employees only need to scan the items once. The software linked to the scanner will take care of the rest.

Businesses looking to improve their physical inventory counts should check out the download the Physical Inventory Count Dynamics NAV Module Data Sheet today.