Understanding Different Inventory County Methodologies: Perpetual, Yearly, Rotative 

The Purpose of Inventory Counts

Inventory counts not only give you an accurate view of all the products on hand but also the potential profit your company could acquire. Accurate inventory counts are mandatory in all logistics businesses in order to be successful. Inventory counts should be done on a regular basis to keep track of the current inventory on hand within your company. 

Book inventory is necessary but there is legislation in place that orders companies to complete a mandatory physical inventory at least once a year. This physical inventory requires all stored products and goods to be manually counted. Often times this process is done under the direct supervision of the supply chain manager.

Physical inventory counts prove beneficial and can help quickly detect discrepancies amongst registered stocks in the warehouse management system in comparison to actual warehouse stock. Manual inventory counts can catch errors from signaling, picking, and reference numbers. Inventory count implementation can be a financial strain and can even cause workforce allocation issues but still, the benefit outweighs the potential issues. The dreaded inventory count may seem tedious but the task is not only mandated but it is a worthwhile business practice to ensure warehouse accuracy and customer satisfaction.

What are the inventory types?

Inventory is easily understood as the complete list of products in stock within a business. Whether a logistics company or in another sector, inventory counts are essential for accurate warehouse maintenance. As a company, you are free to choose how often and the preferred methodology for completing inventory as long as you adhere to the minimum yearly schedule. There are several useful methods that your company could choose to use in completing the task of inventory. The appropriate method for your companies need is vital to success and accuracy. Stored warehouse items can be recounted either perpetually, yearly, or rotatively depending on your companies desired outcomes.

1. Perpetual inventory: Perpetual inventory is also known as computerized inventory. This essential type of computerized inventory, tracks stocked items as they enter and exit the facility in real time. The computer conveniently registers quantities that flow in and the final count or quantities that flow out and the final count. Perpetual inventory is essential for providing open-ended viewing of available goods and helping to avoid potential problems with customers due to stock-outs. This inventory count type is beneficial and will be an integral part of your warehouse management system especially if your company deals with a wide range of SKU’s. However, this system requires company resources and is not always easy to use, especially when the number of items a/o stock rotation is high.

2. Yearly Inventory: Once a year inventory, inventory that is done yearly to confirm the book inventory. Yearly inventory can be a dreaded, tedious project especially for a large warehouse holding many SKU’s. A well-trained staff is imperative for this yearly task to be done impeccably and efficiently. When using yearly inventory your company should pay particular attention to real stock versus book inventory numbers to prevent huge discrepancies. It is necessary to plan for several days to complete a yearly inventory to ensure accuracy.

3. Rotative inventory: Rotative inventory is the recount of various portions of stored SKU’s several times a year. This inventory count should be done either periodically or planned as seen fit by the company. Rotative inventory can be the most challenging inventory count but it offers many advantages such as:

  • Prevent Stock-outs- Allows a consistent, on-going view of stock
  • Regularly update available stock quantities- Helps avoid delays in finding stock errors
  • Easy implementation- Easier to implement than permanent or yearly inventories

 

CONCLUSION

Now that you have a better understanding of inventory count methodology it is important for your company to accurately assess its needs and carefully consider which physical inventory will be the most beneficial. It is vital to choose a system that will allow your company to have its needs met but one that will also help your company thrive. 

If the system your company is using is inefficient and not providing the desired results then changing the method is an easy fix. An accurate inventory is essential for customer satisfaction which in turn leads to a profitable business.

By | 2019-06-27T07:51:17+00:00 June 17th, 2019|Categories: Featured, News|0 Comments

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