Why is an Inventory Important?
Inventory counts is integral to any business
The importance of an inventory: 5 reasons why any business needs regular inventory counts.
You may have been putting off your first inventory, or are even thinking if you need one at all. We hope this article will re-motivate you! If your business is small or large it pays to complete regular inventories – literally!
By completing regular inventories and having an insight into your stores you will find new ways to increase profits and your business.
Let us convince you that an inventory count is integral to any business.
What is an Inventory Count?
Inventory counts are the physical counting and verification of items held in store or warehouses. Inventory count frequency can vary from business to business some prefer once or twice a year while others count quarterly or monthly.
Variations between your manual inventory and your records allow you to pick up on many different issues. It also enables you to put processes into place to ensure better inventory control and management. This in turn will lead to increased profits in the future.
5 Reasons why any business needs regular inventory counts
1: Uncover theft and identify inventory shrinkage issues
Reality in the retail business is that theft happens and will always impact your inventory numbers and cause discrepancies. You will never be able to stop shoplifting completely. By having a regular inventory count you can highlight if a security review is required. This could also discourage rogue employees from stealing. Inventories are undertaken regularly will also show problems with damaged inventory, unprocessed or missing orders and poor inventory control practices.
2: Ensure business targets are achieved
If you identify discrepancies within your inventory numbers this will equate to discrepancies in financial figures. It is much better to find these anomalies sooner rather than at the end of a financial year when you do not have time to put a plan together.
3: Determine product performance
It is important to be aware of which products sell and which do not inventories will put this in focus for you. If you have large numbers of inventory of one product that have been on the shelves a while this could be a good indication it is not selling well. So you may have to reduce the price or move the product to a different location to move the inventory on. This also works if you have less inventory than expected of a product the reason could be because it has sold well or is in a good location.
4. Maximize inventory ordering process
Inventories as previously stated will highlight inventory shortages you may not have been aware of. This could prompt to reorder the products that are selling well. Also it may be on record that a whole pallet of popular items are available but after the inventory count it is identified that the pallet is damaged in transit, stolen or not delivered.
5. Strengthen your pricing strategies
An inventory count will put the finances into the spotlight. An inventory count gives you the perfect opportunity to analyse sales, profits, which products are flying off the shelves and those staying on the shelves. It is an ideal time to revise pricing strategies to enable a business to maximize profits.