What Should Be Considered in Inventory Counting?

The counting process is often underestimated due to the ease provided by handheld terminals, or it is exaggerated and considered too difficult and unprofitable due to manual counting. Many people working in stores and warehouses can be assigned for counting and may be unfamiliar with it. Topics that everyone is assumed to know about inventory and counting should be explained again. The most fundamental issue in the counting process is that counting cannot be done when entry or exit is made, and it can only be done when stores are closed. Since stock comparison will be made according to the end of the day, it should be done at the end of the working day or at the beginning.

The issues to be considered in counting vary for each category. Many factors, such as product packaging features, display features, sales processes, and sales speed, differentiate what needs to be done in counting.

Attention should also be paid to in-house shipping processes, and counting should not be done when the warehouse is shipping but the products have not arrived at the store. There may be delivery notes/invoices that have been cut but not physically shipped yet. When selecting the counting day and time, the integrity of such document entry and physical transactions should be considered.

The counting process is carried out in two environments: handheld terminals and computers. Derinus works online, connected to the database via remote access, and does not require any transfer. The counting preparation, counting process, control, and approval are carried out in 4 steps.

Types of Counting

In full inventory counting, products that have not been counted are reset with approval, and the stock quantities of others are equalized with the counted quantities.
In counting a group of products, the group to be counted is defined in the product selector, and products that have not been counted in this group are reset. Therefore, the product group specified in the product selector should match the products that are actually counted. For example, it is necessary to count the entire category of a brand.
In negative stock counting, it is assumed that products with negative stock that have not been counted are zero. Therefore, it is essential to ensure that all negative stocks have been thoroughly investigated.
In system list counting, system counting lists are created for a specific purpose. These products are counted. For example, 25 different products are listed in the system every day, with a logic such as expensive products, fast-selling products, etc. Stores perform the counting, and the headquarters examines the results.

Sources of Inventory and Counting Differences

Missing documents, incorrect product/quantity entries
Cashiers scanning incorrect products
Incorrect counting
Barcode assignment errors
Pallet/quantity definition errors
Days when store POS systems, Z reports, and headquarters data are not consistent
Incorrect entry of document shipping dates and transaction dates
Promotional products on the line, packaged and sold individually
Weighted products are a problem in themselves
Inter-store shipments not processed
Lack of mutual control in inter-store and warehouse shipments, quantity discrepancies
In-house usage not recorded
Damaged/broken products not entered
Returned products not processed

And of course, theft! If you pay attention, all these transaction types are found in the main menu. In this case, in fact, counting transactions should only correspond to theft and unknown inventory losses.

Basic Steps of the Counting Process

Preparations should be made from physical and systemic aspects. Except for surprise counts, personnel information is essential.

It should be completed from the last closing hour to the start of the next sales and in one go.

Then, counting and stock comparisons are made. There are many reasons for counting differences. Incorrect document entries and cashier sales come first. Attention should be paid to the listed items for stock and counting differences. Other sources of problems should be listed, and solutions should be developed, parties should be trained, and necessary decisions should be made.

Finally, the count is approved. No document entry is made retroactively from the counting date, and if necessary, corrections are made in the counting documents so as not to change the counting result. For this, historical settings in System Management can be provided and controlled.

Recommendations for Full Inventory Counts
Before physically starting the count, preparations should be made in the aisles and warehouses. Product storage conditions should be made suitable for counting. Products scattered in different places should be collected in the same area if possible. Unexpected places such as back of shelves, behind doors, and corners should be checked.

In terms of counting technique, it may be preferable to have three different people pass through each shelf in the counting area. The first person can perform the collection and preparation for counting, the second person can write on a piece of paper after manual counting and stick it on the products, and the third person can control the quantity and enter it into the handheld terminal.

Preparations from a system perspective are made in terms of completing documents. Documents prior to the counting date must be completed. Transfer of sales is also an important point. If necessary, corrections can be made in recorded counting values if entry or exit is made to the counted area during counting.

Usually, more terminals are needed for counting, so the process can be accelerated by using handheld terminals compatible with the system temporarily. If available, terminal acquisition should be planned from other warehouses and stores. If necessary, more remote access licenses should be provided.

Considering that the team doing the counting is inexperienced or the products to be counted are difficult, or to obtain more reliable counting results, it can be planned for each area to be counted again by a different person. In this case, stock comparison is made with the first count, and then when the second count is done, both stock and two count results are considered together, and a triple control is applied.

Using DerinUs Handheld Terminal
Files can be opened on the handheld terminal, and counting can be done with multiple terminals and users. For conflicts, the total quantity counted and the quantity in the file can be seen at any time. On the counting management interface, the information entered in the terminals can be monitored and reported instantly. Since transactions are done directly connected to the system via remote access, unregistered products are detected immediately. If corrections are needed in counting quantities, the same product is scanned, and a record of 0 quantity is made.

The counting file can be displayed and modified on the computer. Deletion can only be done on the computer and must be done by writing to a file.

It is essential to plan well for the files to be opened for users and areas. The boundaries of these areas should be finalized for users.

Step 3: Counting-Stock Comparison
Comparisons are made from many aspects before approval. However, since the time elapsed will create other difficulties, controls should be completed as soon as possible. A report can be obtained for the selected counting file or all files of that area. Various transactions are made according to the reasons for the differences listed above. While checking counting errors, some errors can be quickly detected by sorting from sales price, quantity, and value to less.

Barcode assignment and product definition errors are usually detected as positive and negative stock in two separate product images. Product transfers (movement consolidation) are made for these products.

In retroactive entries made until the count is approved, if products have not been included in the count, attention should be paid to adding these quantities to the counting file.

Step 4: Counting Approval
The most critical information regarding counting approval is the date on which the count will be based. In the comparison and control reports obtained before approval, the creation date of the counting files is used. For the situation where products counted on different dates are written to the system as if counted on a specific date, an additional date is given in the approval step.

During approval, various information is displayed on the screen as logs to assist users as transactions continue.

If products in the counting file do not exist in the system, there is an option to change the barcode information and 'product ID'. Additionally, when the user encounters an error that a product not in the system exists, they are presented with options to continue, stop, or ensure the above control. Faulty situations are displayed in red in the transfer status display.

Approval by Equalization

Entry and exit movements are created only for the differences to give the counting result to the stock quantities of the counted products. It is usually used in lists with small quantities and where the difference is small.

Depending on the option to reset uncounted items, stock quantities of products not counted at all are reset. Here, it is crucial to specify a group of products with the 'Product Selector'. The group properties of the counted products should be selected one-to-one, and all products belonging to this group should be counted. The uncounted product report is the best helper at this point.

A common mistake in this counting approval method is expecting to see the counted quantities in the counting documents created by the system. However, only the differences between stock and counted quantities are found here. Based on this difference, we find the product we are looking for in the document of entry or exit type from the two files formed.

Approval by Resetting

Exit movements (entry for negatives) are created to reset the stock of counted products to zero. Then, the counting results are written as a single entry document. It is usually used in full inventory counts and where the difference is significant. In this approval method, the most questioned issue is the formation of three counting documents. The first two documents reset products with positive and negative stock separately. The third document contains the counting results.

Other Topics

Ideally, it is expected that daily negative stocks are counted in stores and automatically corrected without needing data processing. More importantly, negative stocks remain outside the automatic ordering process. Therefore, products with negative stock are reported automatically to the relevant parties on a weekly or daily basis. Data processing should closely monitor products in this situation.

Although the evaluation of counts in terms of value is more related to accounting, it also closely affects purchasing from the profitability aspect. Usually, the last purchase prices are used as the unit price in counting difference movements.

It is also an important decision whether the people doing the counting see the stock quantities or not. In some cases, stock information may provide an advantage as it may indicate that the product is stored in different places. On the other hand, it may lead to easy counting by directly entering stock quantities as counted quantities. A decision should be made on this issue based on the situation of the people doing the counting and the products.