Inventory / Stock Count

The necessity of inventory - counting process

For most of the enterprises today, importing a large volume of goods to serve production and business activities is essential. However, over-importing will lead to excess inventory and a waste of working capital. Therefore, reporting more regularly on the quantity of goods as planned will always help managers easily come up with a better plan for importing goods, on schedule, while the capital is still automatically revolving.

In addition, the inventory process also helps to limit the loss of materials and goods. Failure to make an efficient stocktaking of inventory will result in damage, loss and sometimes unusable goods. This results in the loss of the real value of the product and direct damage to the business.

In addition, a good inventory process will help businesses save storage costs. In particular, the larger the volume of goods, the more costs of space, electricity, water, labor ... will be incurred by businesses to be able to maintain them. Therefore, in order to reduce costs, you will need an effective stocktaking of inventory.

Details of inventory - counting process
  • Prepare before stocktaking

+ Actively inform relevant departments for the best preparation. Especially for stocktaking days, if really necessary, it is advisable to notify suppliers, partners or customers to avoid disturbing and limit the frequency of adding new goods. Or newly imported goods should be stored in a separate area from the area is being stock counted.

+ Assigning personnel, who will be responsible for participating in the inventory process, usually in the enterprise, the stockkeeper and accountant will coordinate to perform this task, or in some cases, the manager will work directly.

+ Give a more specific plan for stocktaking: which area to check first, which area after, what kind of product is prioritized, what time to time...

  • The steps of the process of stocktaking

Usually, an enterprise can carry out inventory of goods according to the following steps or depending on different business characteristics, there is also the flexibility to change accordingly.

Step 1: Based on the management software and inventory reports, make a list of inventories to be counted, sorted by area order. Notice, the inventory counting sheets includes detailed columns from the name of the goods, the actual quantity of goods, the quantity of goods in the report, notes ...

Step 2: Start stocktaking at the warehouse and take notes on existing templates. There should be two people doing the stocktaking in parallel and recording independent data in two records for comparison to increase the accuracy.

Step 3: After the stocktaking and completing the comparison of inventory results of two people on the actual quantity, if there is any difference, it will need to be counted again to get accurate figures.

Step 4: After closing the actual quantity of goods at the warehouse, it will be compared with the corresponding data on the report. If there is any difference, the stockkeeper and the accountant should investigate and give detailed explanation.

Step 5: After explaining the difference, the accountant needs to adjust the difference according to the actual checked data.

Step 6: Prepare and complete the inventory record, at the same time ask related parties to sign for verification.

Step 7: Note that in case of deviation, the director and the owner of the business will need to find out the reason. Usually there will be cases like the following:

+ The actual quantity is more than the report: this is the case may be caused by a mistake from the data recording to make the report or forgetting about the data entry when importing new goods into the warehouse.

+ The actual quantity is less than the report: this is an important issue to pay attention to because it may be due to the barcode scanning staff being forgotten, the loss due to transporting goods, or sometimes needing attention to cheating, stolen...

Suggestions on how to enhance efficiency of inventory - counting process

Stocktaking regularly

The stocktaking will be done daily or a few days, a few weeks as well as each batch of goods import and export. This method is often applied to businesses with high value products, few types of goods such as businesses specializing in equipment, machinery, typical goods, construction enterprises ... Business owners can limit the deviation and loss however, this will also consume a lot of manpower and time. The accounting department will also be under greater pressure on the workload.

Stocktaking periodically

The inventory will be done according to a specific plan by month, quarter or year, or the cycle in which the business has a specific convention. This method is commonly applied in businesses with large volume, medium value, and diversified products ... This method will help businesses save a lot of time and reduce accounting work. Helps them "breathe easier" than regular stocktaking, but the downside is that it will be difficult to detect errors due to the long distance between each stocktaking.

Some other suggestions

  • Applying technology in warehouse management, this will help the warehouse management be transparent, scientific and limit errors caused by human.
  • Regularly check inventory or in a shorter period to avoid long-time causing errors.
  • There is always a scientific arrangement because it supports faster, accurate and convenient stocktaking.
  • The person in charge will always need to work scientifically and follow the warehouse management process specified by the business.
  • Sometimes instead of wasting effort, you can use a 3rd party service for stocktaking and management report. This can be a useful solution that brings savings with stable effect.

Depending on the actual situation of the size, types of goods, human resources ... that each enterprise will apply a suitable inventory management and stocktaking process to bring the best performance.

Some mistakes easily encountered in the process of inventory counting

Not prepare the warehouse space in advance

Perhaps this is the most common mistake made by warehouses because they do not know that not having a specific plan and not expanding enough space for large number of goods will cause wasted loading time. So be more proactive in asking questionable questions to estimate the situation:

  • Is the space tidy yet?
  • Are products in stock ordered correctly?
  • Are sorted products easy to obtain for inventory?

Or it is easier to see that there is no warehouse and warehouse floor map for each area, this is small but is an important factor in saving time.

Lack of inventory personnel

In addition to space, personnel is also a factor that needs to be planned. Stocktaking participants will need professionalism and mastery of the best skills to complete the stocktaking.

Sometimes outsourcing is more effective than unskilled internal staff. However, outsourcing is not necessarily meaning that the enterprise will not need personnel to support the stocktaking. The business manager will need to supervise, ensure the hiring staff follow the correct process and support when necessary because they do not know all about the enterprise's warehouse.

There was no supervision from the start

Monitoring from the outset for the stocktaking process and inventory staff will help you to grasp errors, doubts or factors affecting stocktaking. Especially there are suggestions for preventive measures that will save you a lot more time and losses.

Not prepare in advance for inventory destruction

The preparation of procedures and documents related to inventory destruction will help enterprises free up warehouse space more quickly and bring more efficiency to warehouse management.

Failure to promptly resolve errors arising in the stocktaking

When an error occurs, whether due to the counter's side, the product or the stocktaking method, it is necessary to promptly resolve it before the inventory results are released. Even though it is a minor error, there should be an optimal solving. Particularly are errors related to the discrepancy between actual quantity versus reporting needed to be paid attention to.

At Crowe Vietnam, we offer a full range of tailor-made Accounting services that meeting the exact requirements of each individual client.