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How to Count Inventory: 11 Ways to Improve Your Accuracy

If you’ve ever had to count inventory, you know it can be a tedious and time-consuming task. But it’s also an important one – after all,  knowing how to count inventory accurately is essential for your businesses to run smoothly.

There are a few things you can do to improve your accuracy when counting inventory. From choosing the right staff to using inventory management software, here are tips on how to count inventory accurately.

What are inventory counts?

An inventory count allows you to keep track of which products are in stock at any given time and in what quantities.

An inventory counting is a way to determine the condition and quantity of products in stock in a retail space. An inventory count allows you to compare the stock you have in stock with the numbers you have entered in your inventory tracking spreadsheets. Are they compatible? If they don’t match, you can ask why and create plans and procedures to fix it.

There are many methods of counting inventory and best practices. Some companies count stock quarterly or once a year, while others do rolling inventory counts (cyclic accounting).

Why is Inventory Counting important?

Inventory counts are vital because they allow you to see what you have available right now. This will help you avoid stockouts and overselling. The information from inventory counts can be used to inform your inventory forecasting, and to identify products that are costing you money due to overstocking.

An inventory count will help you make sure that your sales figures and paperwork match the stock on hand. It will also help you determine your shrinkage, which is the amount merchandise that disappears without explanation.

Reliable inventory counts are essential if you sell through multiple channels, at multiple warehouses, or at multiple retail locations. If customers are waiting too long for a product to sell, they will be unhappy.

A small retail shop can probably do multiple manual counts per day. This becomes difficult when you scale your business. Ecommerce retailers who want to expand their business or add new sales channels will need to invest in more advanced inventory tracking systems.

uch stock they have. If you do not know how much stock you have, you could end up overselling or stocking up. Both of these can be detrimental to your business in many ways. Although it may seem easy to keep track of your stock for small retailers, it can quickly become complicated. This is especially true when you get into multichannel ecommerce.

Physical inventory counting

A physical inventory count is a process where businesses count their physical assets and record the data. This data can be recorded manually, using pen and paper, or electronically using a mobile device.

The purpose of a physical inventory count is to reconcile the stock data that a retailer has on paper with the actual inventory in the store. This counting process helps to ensure accuracy and prevent loss.

If you want to do a physical inventory count quickly and efficiently, there are a few things you can do:

First, learn the different methods for counting physical stock. There are a few different ways to count your inventory, so find the one that works best for you and your team.

Second, get tips on how to improve the speed and accuracy of your inventory counts. There are a few simple tricks that can help you count more accurately and quickly.

A physical inventory count is a process where a retailer counts all of the physical merchandise in their store. This count is used to compare against the inventory records to see if there are any discrepancies.

Even if it’s not a job you’re too keen on, taking an inventory count is a necessity for any business. Making sure you have an accurate stock level on hand compared to what you have written down is integral to running a successful retail business.

A store’s physical count of its items is a process that ensures that its items are accurately counted. This also helps the store to spot any cases of theft or loss early on.

When To Do Physical Inventory Counting

The frequency of a physical inventory count depends on many factors, including the number of SKUs in your inventory, how many items are sold each day, which physical inventory method you’re using, and whether you use inventory technology such as a POS system and barcode scanners.

Let’s say, for example, that you’re a clothing store with 120 different stock keeping units (SKUs). It shouldn’t take you too long to tally them all up.

So, a monthly physical count of your inventory would be best.

A larger business may need to conduct more frequent, but smaller, counts of their merchandise. This allows them to check a larger quantity of items, but in a shorter amount of time.

It’s recommended to do a physical inventory of all your merchandise at least once a year. This will ensure accurate records of all products going into a new year.

How To Count Inventory Using Inventory Management Software

Planning, choosing the right software for your business, and setting up QR codes or barcodes are the best ways to count inventory. Even if you don’t use an inventory program, the majority of these steps still apply. They will just take longer.

1. Use inventory management software to simplify inventory counting. You will likely need to manually count inventory without it. This can be difficult, especially if items are spread across multiple locations. 

Sortly can help you with inventory tracking and counting.

  • Track items at multiple business locations.
  • Categorize
  • Format data in an easy-to-access and understand.
  • Create inventory reports
  • Offer a mobile friendly dashboard
  • Barcode scanning is done right from your smartphone or tablet. No external hardware is required.

2. Identify all inventory locations – List every physical location where your inventory is kept.

3. Each warehouse or storage area should be mapped – A list or diagram of each storage area is necessary to avoid missing items and label inventory.

4. Identify each item and list them in your inventory.

5. You can categorize inventory items – Create item categories to make it easy to sort and locate them in inventory management software.

6. Describe the items – If inventory automation is being used, create a unique description of each item and list its physical location. Include essential details to store in the QR code or barcode.

7. Create barcodes and QR codes – Use the inventory management system to generate barcodes and QR codes. After printing the codes, test them before you apply them to your inventory items.

8. Organise your team members – Determine who will label the items and train them how to use the software. Schedule a date to automate the inventory counting process.

9. Use barcodes and QR codes to scan items – By applying barcodes and QR codes to items, the inventory counting app will scan them. It will automatically count your inventory.

Best practices for counting physical inventory

Inventory management can be a real pain, but there are several ways to cut down on the amount of time it takes to count your inventory.

There are simple ways to improve your inventory control.

Address discrepancies immediately

Inventory shrink and dead stock are two issues that can plague retailers.

Physical inventories help you reconcile your inventory sooner rather than later. The sooner you do this, the less likely you are to oversell products.

If you come across any discrepancies during the inventory reconciliation process, it is important to create a stock reconciliation statement. This statement should explain the discrepancies and override any previous records. By doing this, you can ensure that all of your ecommerce inventory is accounted for.

Choose staff who are attentive

How well your staff members are trained and how well they pay attention will greatly affect the accuracy and speed of the current physical count.

If you’re finding that managing and tracking inventory is taking up too much of your team’s time, you might want to consider partnering with a 3PL. A 3PL can help optimize your inventory management process, freeing up your team’s time for other tasks.

3PLs, like Shipbob, utilize technology that allows them to gather real-time inventory data. This allows them to give you insights that can help you make better business decisions.

ShipBob’s technology allows you to track your inventory in real-time, so you always know what’s in stock and where it is. This makes it easy to keep your customers updated on the status of their orders and helps you avoid any potential delays.

We frequently download Excel files from the ShipBob dashboard in order to analyze various data points, such as cancelations, order weights, and shipping times. This allows us to ensure that ShipBob is meeting our expectations and providing a high-quality service.

Even the way their warehouse receiving orders (WROs) work for sending inventory is very helpful and straightforward.

Inés Guíñez, head of logistics at dossier

This is the best way to keep track of inventory levels, reorder when necessary and predict future demand.

Using Inventory Scanners to Improve Inventory Accuracy

To improve your inventory management, it would be wise to implement a barcode scanning solution.

Inventory scanners are an efficient way to keep track of products and ensure accuracy in inventory levels. By using barcodes, each SKU can be identified quickly and easily, making it easy to see what is in stock and where it is located.

Barcodes make it easy to track your inventory by product number, see how many you have left, and locate each item in your warehouse.

Use inventory management software

If you’re still managing your inventory by hand, it’s time to consider investing in inventory management software. This type of software can save you a lot of time and hassle by automating the process and giving you real-time visibility into your inventory levels.

These types of software programs are designed to streamline tedious processes, such as inventory management, and keep track of them in real-time, even when selling through multiple channels or multiple warehouse locations.

If you are looking for a comprehensive inventory management solution, there are a few different software options that you can consider. These solutions offer different capabilities based on your specific needs, including multichannel inventory management.

If you don’t want to invest in your own software for inventory, you can partner with a digital 3PL, such as Shipbob, who offers this capability as part of their own services.

Ways to Improve Your Inventory Accuracy

After you’ve counted your stocks, take immediate actions to improve the accuracy of your inventory.

Here’s how:

Double-check your numbers and inventory before updating them. This will ensure that your records are accurate and that nothing is left out.

And the best time to do this is right after you’ve completed your stock take.

To be effective, an inventory check or audit needs to be done as soon as possible after the information is learned.

Looking at inventory reports will give you an understanding of what you can do to improve your business.

This task should be straightforward if your POS or retail management system has reporting and retail analytics capabilities. Just generate the right reports and study the data for actionable insights.

If you’re looking to keep track of your stock, you can use a free template from Vend. This can help you stay on top of your inventory and avoid any unnecessary losses.

Use your inventory report to figure out which areas in your physical store are high risk. That way, you can inform your employees about these places and figure out ways to minimize loss.

This will help you figure out why losses or discrepancies are taking place, so you can take preventive action for the future. Comparing multiple completed inventory count reports can help you spot patterns and figure out why losses or discrepancies are taking place. This way, you can take preventive action to avoid these issues in the future.

This can help you figure out which of your salespeople are performing the best, so you can reward them accordingly.

Compare your past and present inventory report to see if you’re improving. Are any differences becoming less noticeable?

The best way to find out is to compare your data.

Possible reasons for discrepancies

No matter what you do, there will always be some discrepancies in your stock count. Theft, damage, and simple human error can all affect the numbers.

If you find that your business is experiencing higher than average shrinkage, it’s important to take a closer look at your receiving and storage policies. In some cases, security issues may be to blame. By implementing new procedures, you can help reduce shrinkage and keep your business running smoothly.

If your inventory count shows a shrinkage that is much lower than what was expected, it is possible that an error was made during the counting process. Having an auditor present can help to identify any issues with the methods used or the results obtained.

Some of the more common reasons inventory counts don’t match are:

There are a few reasons that discrepancies can occur during an inventory count. The most common reason is theft, but items can also be lost or misplaced, and mistakes can be made during the counting process. Having robust systems in place can help to reduce the number of errors that occur.

The information you learn during your stock count can be extremely valuable in terms of understanding if you are dealing with internal theft, careless mistakes, or a combination of both.

It’s important to have an accurate and effective stock count process for a number of reasons. Many businesses are making the switch to cycle counting method in order to improve their inventory management.


If you want to improve your inventory accuracy, there are a few things you can do. From choosing the right staff to using inventory management software, following these tips you will know how to count inventory as accurate as possible.

Whether it’s through Microsoft Excel or with a POS like Vend, every retail business needs to do regular, thorough, and accurate inventories. Smooth and pain-free ones don’t just “happen”. They are the result of careful planning and preparation.

If you will be conducting an inventory count in the near future, then make sure you’ve completed the following tasks. Doing so will make the whole process much easier.