In this article, we explain exactly what inventory records are and why it is important to maintain an accurate inventory records. We provide a simple 5-step framework to do it efficiently, with real-world examples. Read on to learn more.
Inventory records are detailed listings that track the quantity, value, and location of items a company has in stock. These are often updated in real-time to reflect sales, returns, and new acquisitions.
Example: Tech World Inc. has an up-to-date record showing they have 5,000 smartphones in stock at the moment, valued at $1 million. These records play a pivotal role in supply chain management, financial reporting, and strategic business planning.
An accurate inventory record is a critical asset for businesses for many reasons. These may include:
Financial Accuracy: It ensures that the financial statements of a company are correct, allowing for proper financial planning and reporting.
Operational Efficiency: Businesses can easily identify which products need restocking or which are overstocked, optimizing warehouse space and resources.
Loss Prevention: It helps in identifying theft, wastage, or other discrepancies quickly, safeguarding the company's assets.
Better Customer Service: With a real-time understanding of stock levels, businesses can fulfill customer orders promptly and accurately.
Informed Decision Making: Clear insights into inventory turnover, sales trends, and stock levels can guide buying decisions and marketing strategies.
Regulatory Compliance: Certain industries require detailed inventory records for regulatory reasons, ensuring businesses remain compliant and avoid penalties.
To ensure your inventory records remain precise and up to date, follow our simple 5-step framework below:
Regularly check physical stock against recorded numbers. Set regular intervals (monthly, quarterly, or annually) for manual counts of your physical stock. Compare these counts against the figures in your inventory system.
Example: Books & More discovered they had only 450 books of a particular title in their warehouse as opposed to the recorded 500, prompting a system correction.
Automated tools minimize human error. Invest in a reliable inventory management system that can help in tracking, reordering, and analyzing product data. Ensure it has features like real-time tracking, alerts for low stock, and analytics for inventory turnover.
Example: Dress Empire used software to keep track and found that their popular size M dresses were selling at twice the rate of other sizes.
Ensure staff understand the importance of accurate recording. Conduct regular training sessions for employees to keep them updated about inventory processes. Emphasize the significance of accurate data entry and train them on the use of any new tools or software.
Example: Coffee Beans Ltd. realized a discrepancy in their records when a new employee mistakenly recorded shipment. Proper training resolved the issue and prevented any further damage.
Barcode scanning ensures quick and precise data entry. Attach barcodes to each item and set up barcode scanners at every entry and exit point in your warehouse or store. This ensures that every product movement is recorded automatically, reducing the need for manual entry.
Example: Auto Parts Corp. scanned parts as they moved through the production line, reducing manual recording errors by 90%.
Establish a clear procedure for returns, damages, and disposals. Create standardized procedures for documenting any changes in inventory, whether they are sales, returns, damages, or disposals. Ensure that these documents are easily accessible and are consistently used by all staff.
Example: Glam Cosmetics documented a return of 50 damaged lipsticks, ensuring their records stayed accurate.
Eco Furniture Inc. is a growing furniture company that recently faced challenges in tracking its diverse product range. They decided to implement our structured inventory record process:
Eco Furniture began with frequent audits and found a mismatch of 30 lounge chairs between their physical stock and records.
Investing in Inventory Management Software, they identified that their eco-friendly tables were their bestsellers, often running low in stock.
They prioritized employee training, which led to a 70% reduction in recording discrepancies within three months.
After implementing a barcoding system, they streamlined their dispatch process, ensuring every item dispatched matched the order.
Through clear documentation, they processed a bulk return of 100 faulty desk lamps, keeping their records updated.
We hope this article has given you a better understanding of what inventory records are and why it's important to maintain an accurate inventory record at all times.
If you enjoyed this article, you might also like our article on closed for inventory or our article on inventory conversion period.
