Keeping tabs on everything that’s happening in your warehouse takes time. It can be a pretty big task, but inventory management is necessary to keep a company afloat. One piece of the inventory management puzzle is inventory reconciliation. It’s an integral part of checks and balances in the warehouse. Let’s delve into the ins and outs of inventory reconciliation so you have a better understanding of its role in the warehouse.
So, what is inventory reconciliation?
Essentially, inventory reconciliation is a process that compares written inventory stock records against the physical stock take on shelves and in the warehouse. By going through this reconciliation, you can identify errors. This comparison allows you to see if there is a difference between your inventory stock records and what you actually have on hand. If there are any glaring mistakes, this will prompt your business to investigate further.
Reconciliation helps you see if there are any gaps in your inventory stock tracking procedures. It can also shed light on security issues and theft problems. In addition, a reconciliation will count damaged or old stock that’s still sitting on the shelves. The results can help you keep accurate records, assess the value of your current stock and create more precise re-ordering processes. Inventory reconciliation plays a key part in streamlining inventory management within a warehouse.
How do you conduct an inventory reconciliation?
If you want to conduct an inventory reconciliation, you should pick a routine time that you’re going to do this. Perhaps the start of the month, or the end of a quarter. It’s helpful to measure consistently.
Conduct the stock take
Then, you should conduct a stock take. Make sure you have an accurate count of the physical inventory. Ensure that all stock numbers are recorded properly and each one is aligned to the correct unit of measurement. What if one system was counting shoes by the pair and another was counting them individually. You’d wind up with two very different numbers.
Look for mistakes in the stocking process
Track down misplaced stock and ensure it’s in the right place. Let’s say you went to buy a 4m x 4m tarp to cover some furniture. There was a box of 2m x 2m tarps and 4m x 4m tarps. However, there wasn’t enough shelf space for the 2m x 2m tarps so the stocker put a large pile on top of the 4m x 4m pile. It would be easy for a customer to pull the wrong tarp just because of some simple stocking issue. Moreover, it would be easy for a stock-taker to count this incorrectly.
Assess the results and check for recordkeeping errors
Mistakes can be made if items are typed in the wrong column or the math isn’t done correctly. Sometimes the error can be on the calculation side, while other times the physical inventory is missing. It’s also important to make sure all invoices have been paid and shipments have been entered into the system. Perhaps you counted 400 soccer balls, but your records state you should only have 100. If you haven’t entered the most recent invoice of 300 soccer balls, then your numbers will seem off. Also, talk to employees who do the stocking and see if anything different happened from their perspective.
Influences on your inventory management
Inventory reconciliation can positively influence your inventory management system by providing more transparency and checks and balances throughout the process. It can help streamline systems if stock keeps getting misplaced or encourage better security if theft is becoming a problem. Overall, your inventory management processes will be stronger by implementing reconciliation in your warehouse.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.