Most of today’s business enterprises tend to import a large volume of goods to serve production and business activities. However, overstocking leads to a waste of inventory and working capital. Therefore, conducting inventory reconciliation more often on the planned quantity of goods will help the manager easily come up with a better plan to import goods on time, while the capital is still automatically rotated.
In this article, we offer 5 secrets to help your business conduct inventory reconciliation quickly and effectively.
What is inventory reconciliation?
Inventory reconciliation refers to the process by which a business compares the actual amount of inventory with the records it maintains. Inventory reconciliation is considered an essential maintenance process that helps businesses check the effectiveness of the inventory control systems they use.
How to reconcile inventory?
In order to conduct an inventory reconciliation, you should first check the actual inventory counts. This is an important step because inventory counts can be very error-prone. Recount your actual inventory with your team for the most accurate numbers.
After you’ve recounted your inventory, compare it to the inventory records your business keeps. Once you’ve done the comparison, you need to look at the delivery/shipment of inventory since the last reconciliation. You’ll need to review it to see if there are any differences that might explain the quantitative difference.
If you have found the cause of the difference, you need to create an inventory reconciliation that explains the difference. But if you can’t find the direct cause of the difference, you need to discuss it further with your team. Match your profile to match the actual number of items in your inventory and consider it as lost goods. You need to constantly adjust your business’s inventory. This will result in more accurate metrics over time and minimize inventory shrinkage, saving your business money in the long run.
5 secrets to quickly conducting inventory reconciliation
Checking inventory seasonally
The seasonal inventory method means that you have to check your inventory each season, based on demand. This method is especially suitable for clothing businesses. You will have to check the row each season, and this way you can predict future trends, adjust the number of reorders and set the correct reorder points.
The ABC method is a popular method to help your business conduct inventory reconciliation easier. This method divides inventory into three groups. Group A covers 20% of the best-selling items, Group B includes items that account for 60% of the mid-margin value, while Group C covers the remaining 20%. This method prioritizes the best-performing products, frequently counts items in groups A and B, and provides a substantial amount of inventory data that can be analyzed for accuracy.
Checking at random
The random method is when you do an inventory reconciliation whenever it works best for you. It could be twice a year, once a year or every week. Having it on a set schedule ensures it is completed in a timely manner.
This method requires your employees to count specific items or areas in your inventory on a daily basis. Over time, you’ll count your entire inventory, just by section. The advantage of this approach is that cycle counting can be conducted without disrupting the day-to-day operations of your business. The potential downside of this approach is that it relies on data collected over time.
Manually reconciling inventory is difficult because it can require companies to shut down operations and spend planning for trained inventory managers. However, today, businesses can apply inventory management software to reconcile inventory easily.
ConnectPOS is a great tool for your business to manage inventory. Along with its management features, ConnectPOS is also a solution to help you conduct inventory reconciliation faster and more efficiently.
Inventory reconciliation helps to limit the loss of raw materials and goods. A good inventory process will help the business save on storage costs.
Contact us for a quick inventory reconciliation method.