How do you audit inventory to achieve 100% accuracy?

Inventory audit is an important part of Inventory Management and have serious financial implications. The flow starts with defining the Inventory Audit processes (SOP) or the manual for all the stakeholders. This includes- defining the custodian of inventory audit, what all to be audited (saleable goods, consumables, damages...), frequency and timing of audits, training of team, software and hardware to be used, analyzing the variance report, taking corrective actions, re-defining the processes if required.

The best method from experience is that count that has 2 different count groups responsible for a section. They both count the same place, one starting from the beginning,the other from the end. They reconcile at the end of the count and sign off. Important to note with this method includes: 1. Counters must be well trained on how to count. 2. Count must be done independently . 3. Every cancellation must be counter signed. 4. Proper reconciliation must be done. 5. A recount must be done immediately where there are differences. 6. A proper sign off must be done with signature, counters name and date of count. 7. Count start time and end time must be written on the document. 8. Count imputation on system must be accurate to reflect count.

I personally prefer the cycle count periodically. It is imperative that each department head takes onus of their inventory and periodically reviews the same with the finance / stores - this way one has a better idea at any given point of time .

Inventory Heath - Weekly twice or thrice I do keep a track of my inventory of what's moving fast and slow, which are the high end articles and low end articles, are they matching with the SOH count physically or not, having an eye on exchange & defects products too

Cycle count is an inventory audit method that is commonly carried out. But before the audit is carried out, it would be better to first improve and prepare material master data by grouping and classifying inventory. Grouping can be based on storage location, type, commodity and inventort class such as slow, medium and fast moving. The audit can be started base on financial concerns and focus on the analysis that will be applied. (Starting from selected group or class) Accuracy really depends on how we apply the correct method and steps, especially for large amounts of inventory.

Gather the necessary tools, such as barcode scanners, inventory management software, and any physical tools required for counting. Ensure your staff is adequately trained on the chosen audit method and tools. Assign specific roles and responsibilities to team members.

Cut down on manual processes to ensure your team has the ability to audit more often. Make conscious efforts to integrate procurement systems with POS systems throughout the operation. Tighten controls and restrict access to products where access is unnecessary. More than anything, trust in your people, and make hiring decisions with character and integrity in mind.

My recomendation to a better control inventory is a annual physical inventory + cycle count with specifics control based on inputs from materials/planning, purchasing and finance, along with this, one solution we implement and we has great success was having a consignment program/VMI with space allocated inside the building and vendor getting paid when parts/BOM shipped to the customer/storage or DC.

One thing I have found helpful is to build your team on a foundation that is solid. Assigning roles and responsibilities for each gives them accountability. Following policy and procedures each step of the way ensures we are all on the right path.

I find this interesting. We add to cycle count every Manual Back Order or error that occurs between our two systems. I have associates do first counts along with some Inventory Specialist. Inventory Specialist ALWAYS do second counts from sheets printed from our inventory system to what is physically in the location. About 4-5 times a month I will have my supervisor run cycle counts so I can be with my specialists and see where improvement can be made.

Schedule the stock count by category and sub category wise which will be more efficient instead doing this in one go . It will reduce the chances of errors and margnally the count will be accurate almost 99% .

Um método eficaz pode separar os itens com maior valor agregados serem contados em alguns períodos exclusivos e itens com maior ciriticidade ser inventariado a cada pagamento para as áreas. Mas o cronograma é crucial para uma rotina disciplinada.

Inventory is the life blood of operations, both manufacturing and service industries acknowledge. Therefore , utmost care , frequency and the end objective should be defined and SOPs followed . Too much inventory , too little inventory , perishables and fashion trends play a major role in business success.

2.Involving multiple parties, such as different departments, divisions or individuals, in the auditing process can add an extra layer of checks and balances.

Develop a detailed plan outlining when the audit will take place and the scope of items to be audited. Consider factors like business hours, peak times, and any periods of increased or decreased activity that might impact the audit.

Absolutely- executing the audit process within the timeframe is critical . The process should be simplistic and effective . This is non negotiable. Specialists are needed for each industry type .

In my automotive experience I believe the main inventory benefits are based on route cause analisys and strong focus on bill of material and consumption declaration accuracy. Inventories won't be used as a way to correct mistakes on operations, it shal be the tool to improve stock management.

Execution is key to the process. This is where you can literally find large dollar amounts of inventory discrepancies. I've seen huge wins throughout my career during this part of the process. "Ghost" obviously lead to a loss but when you find unaccounted for profit.... That's where it's at!

Conducting visual audits and sample counting by classification are relevant to detect any flaws in the counting process. Additionally, cross-referencing systemic information ensures the effectiveness of counting and entries.

I have found you must put a plan in place and then follow it. Counting your inventory 4 times a year on a schedule works best for me. The building is divided into sections. You lay out a plan of what sections will be counted each day. Analize the results and make any corrections that are needed.

Review the data analyse the results and compare them with previous records. The key to an accurate inventory is to make a monthly stocktake to avoid inaccuracies and cost increase.

While counting the room of errors will always be there . Human errors will always appear such as wrong count , over counting , or zero counts especially when the stocks are tehre and somehow nobody noticed . For auch errors need to recount which helps the accuracy of audit before finalizing the count .

Para estoques muito diversificados uma op??o é avaliar qual família de produto apresenta a maior inconsistência ou até mesmo as posi??es de estoque, a partir disso cabe avaliar se é uma situa??o processual de opera??o, ou treinamento das pessoas que executam aquela etapa ou até mesmo uma necessidade de revis?o de procedimento existentes.

Review the collected data to identify discrepancies between the recorded and actual inventory levels. Investigate the root causes of discrepancies, considering factors like human error, system glitches, or theft. Analyze patterns or trends in the discrepancies to implement preventive measures.

Pour comprendre les écarts, il faut être capable de comprendre quels sont les références qui font partie de la démarque inconnue. Et suivre un tableau en ce sens.

When in a large WH, the weekly cycle counting is the must effective way, you found currently issues and at the results audit analyses you get actions to correct it, then you sustain it.

Once the results and the financial impact are accounted for, and we have the data we need to perform a root cause analisys to solve the issues that created the descrepancy, we must take an organizational approach to assure all aspects are covered ej, we need to include Purchasing in case there is supplier issues, engineering for BOM issues and WH for the main material handling.

Make sure the processes in the day to day are followed and well documented, help your teams see the full circle and how their work impacts the end of year (flip the negative impacts into positive ones). Involve different people in the audit, people learn from experiences and it's a great way to build acumen.

Address identified issues promptly by making corrections to inventory records. Implement corrective actions, such as retraining staff, fixing software glitches, or enhancing security measures. Introduce preventive measures to minimize the likelihood of future discrepancies.

I address every product miscount with my specialist right away because even I after 4 yrs don’t understand the UOM on new product we are constantly getting. Some of them stare at me like I have 3 heads and say, we know that, others don’t and get the information they need. It’s not about educating one person, it’s about educating the whole team.

You need to do housekeeping in the warehouse storage area such as proper tagging , segregation of SKUs’, regrouping if necessary and update all transactions in system so that the count can be efficient .

Reflect on the overall audit process and consider additional factors for improvement. Evaluate the effectiveness of the chosen audit method and adjust strategies as needed. Continuously refine the inventory auditing process based on lessons learned and changing business dynamics.

One key factor in mitigating inventory shrink is proper validation processes for incoming and outgoing freight. A simple check AND independent validation by a second person can eliminate inherent human errors - by your team or your vendors & customers. Now that you can rule out those 2 key sources of error, you can focus on theft and/or in-house damage as potential causes of shrink. Knowing where/how the shrink occurred is the first step to implementing effective policy/process changes.

Below points are from hands on experience: - For large volume inventory cycle counts is must because that will keep the process in check all the time. In addition monthly physical audit of total inventory with system rectification to match physical and thorough reconciliation of results. - A very important point to consider is having right and continuous training and development of warehouse personnel handling inventory on daily basis. This will avoid over/under/incorrect shipments. Additionally, its extremely important when warehouse has high turnover rate. Its better to invest in right type of trainning and development rather than seeing huge discrepancies. - Written documentation of process for adequate compliance.

After first counts are done in a large warehouse, my specialists go out and recount every location that threw a -$300 to $300 variance. My overnight specialists also work on LBB (Location By Bin) which helps find lost product and get more products out of locations to make room for pallets.