Manual Inventory Count - How Not To Do It
Just a little while ago the only way to do a physical inventory count for small businesses was by using paper and pencil.
Employees had to go wall to wall and record all inventory counts manually, either by finding the right item on the inventory count sheets, or by recording item information on a
blank form. Needless to say, this method isn't effective. It takes a lot of time to record inventory information manually, or to look for each item on the pre-printed inventory
sheets. It is also prone to making mistakes, double counting some items and missing others entirely. Verification counts often do not match, and paper notes are misplaced or
lost, resulting in multiple re-counts of the same area. Finally, all notes have to be manually entered into a computer - another tedious and daunting task prone to errors.
Previously small business did not have much of a choice. The alternative to manual count - using barcode scanners or mobile computers linked to a local computer network -
requires initial investment not feasible to a small business.
Now, when the new technologies (mobile, cloud, QR codes) allow businesses of any size to use barcode scanning for physical inventory count and send data directly from a
smartphone to the cloud, eliminating manual entries, there is no reason to continue doing inventory counts manually.
How To Use Smartphones For Physical Inventory Count & Stocktaking
First, you need to make sure that all inventory is labeled. If you receive inventory from a manufacturer, and it is already labeled with a barcode or QR code, you can
use existing labels. If you receive unlabeled materials, or you produce part of your inventory in-house, it is a good practice to label all inventory items as they are
produced or when they are received in the warehouse. Labeling is the first necessary step for a proper accounting of all materials, parts and inventory that you purchase,
produce and / or sell.
If you are labeling inventory yourself, you can use either UPC barcodes or QR codes. If you do not have strong preferences, use QR codes - they can be more reliably scanned
by the smartphones even if the label is partly damaged and can include much more information than a regular barcode. Many label printers are now coming with the QR code
generation capabilities, and some of the inventory count / inventory management software systems have built-in QR code generators. For example
QR Audit stocktaking software comes with an option to generate QR codes, bulk download them or lay out for
printing on the sheet labels if you are using a regular office printer.
If you already have an established process for printing UPC barcodes and do not want to introduce any extra changes, smartphones can scan UPC barcodes as well -
you do not have to change established procedures.
Using Smartphones For Inventory Scanning
Traditionally businesses were using barcode scanners or mobile computers for inventory management and counting tasks. However, this can be quite costly, since you
need to purchase multiple scanners to supply all employees who take part in the physical inventory count. You also need to connect scanners to your computer network, which for many
businesses means spending more money on network consultants.
Now, when very affordable applications and software are available which allow you to use smartphones as both barcode scanners and mobile computers, using smartphones for inventory count may be a better choice
for your business.
Here are just several reasons why you may want to use smartphones rather than traditional scanning equipment:
- You do not need to spend money on hardware - employees can use their own smartphones for taking stock. And even if you do need to purchase smartphones or tablets,
it will cost you significantly less than traditional mobile computers or even wireless barcode scanners.
- Barcode scanner does not have a screen, so there is no feedback or ability to enter data for an employee unless (s)he is next to a computer screen. Employees work
blindly, not seeing what had been scanned, and cannot input data (for example scan once and enter quantity manually instead of scanning an item multiple times).
This can easily lead to errors (scanning the same item multiple times or missing it entirely), and takes more time if you have multiple inventory items that are the same.
- Mobile computers can give feedback and allow user entry, but can be expensive, and you will need to purchase mobile computers for all employees who are taking part in the
- Software for mobile computers tend to be significantly more expensive than smartphone applications.
- You don't need to spend money on network consultants to connect your scanning devices to a computer network. Smartphones are usually working with a cloud software,
and only need cellular or wi-fi network connection to send data. If no connection is available, data can be stored on a smartphone and submitted later, when connection is available.
- Employees can take photos with a smartphone and attach them to the submitted data if item conditions need to be documented.
Physical Inventory Count Process Using Smartphones
Here is how physical inventory count process may look like when you are using smartphones (check out how it works with
QR Audit stocktaking software)
- Divide the whole area where you plan to do physical inventory count into the sections, and assign each employee to his / her section.
- Employees can use their own or company owned smartphones or tablets to scan in inventory in their designated locations. Multiple employees can do stocktaking at the same time.
- An employee starts scanning in inventory items in his / her designated area.
- If there are several items that are the same, an employee can either scan each item, or scan once and enter item count for faster entry.
- The same inventory items do not have to be located together for the proper counting. Stocktaking software will properly sum up quantity of each line item submitted in
different batches and / or by different employees.
- As an employee scans inventory in, running feed is displayed on a smartphone screen, so (s)he knows exactly what is scanned in the current batch, and can make corrections
- Scanned data are saved on the smartphone, so an employee can stop and resume at any time without losing collected information.
- Batches can be submitted to the cloud at any time during the stocktaking process.
- When physical inventory count is completed, all collected data is securely stored in a cloud, and reports are available on inventory count results and discrepancies.
Cloud Software For Inventory Count Processing
Smartphones are one part of the physical inventory count automation. The second important part is a central database to store data, and a software to process the results.
After data are collected, you normally want to enter all data into a software or a spreadsheet, then compare it to what you are supposed to have and identify any discrepancies.
If you are using stand-alone mobile application for inventory count, this is the part you will need to do manually.
Just as inventory data collection using paper and pencil is slow and inefficient, so is manual data entry into the software or a spreadsheet,
and trying to manually compare inventory "on the books" to physical inventory results. That's why modern inventory stocktaking software
usually consists of the two parts: mobile application to collect inventory data, and cloud backend where data are stored and processed.
Here is what happens during and after stocktaking process if you are using integrated mobile application and cloud software:
- As employees scan inventory and submit scanned batches, the data is routed to the central database on the cloud server.
- When inventory count is completed, software compares "on the books" inventory to the inventory count results, and produces reports on inventory count results and discrepancies.
- If there are any questions, you can review raw inventory count results which shows each submitted batch, along with the date, time and employee name.
- You can get various statistics on missing inventory to identify the trends and correct the problem early.
Now, when there are a lot of affordable options to do complete physical inventory count electronically, there is no reason to suspend normal business operations and go through
the tedious and daunting process of manual inventory count. Although different hardware and software combinations exist to help you with
the stocktaking (barcode scanners, mobile computers, smartphones for inventory data collection, on-premise desktop software and cloud based software for data storage and processing),
integrated cloud - mobile applications provide the most affordable and effective solution.