Inventory Counting: Why Perform Regular Inventory Counts?

Inventory counting is not just a task; it’s an essential pillar in the apparel industry. This meticulous process involves the physical counting of all merchandise to verify stock levels and ensure the accuracy of the physical inventory on hand. 

Why is inventory count significant? Because accurate inventory data is crucial for making informed purchasing decisions, maintaining customer satisfaction, and ensuring the financial health of your business.

In this post, we will dive deep into the concept of inventory counting, why it is important, types, and best practices. 

What is Inventory Counting?

Inventory counting

Sometimes referred simply to as inventory count, inventory counting refers to the process of physically verifying and counting all items in stock. This process is essential for maintaining accurate inventory records, ensuring that the actual stock matches what’s recorded in your inventory management system.

Streamline your processes with a tailor-made inventory management solution.

Why Inventory Counts Matters

  • Accuracy in Financial Reporting: Your inventory levels directly impact financial statements. Accurate physical inventory counts ensure that the cost of goods sold and profits are correctly reported.

  • Efficient Supply Chain Management: Knowing exactly what you have helps in planning purchases and production, avoiding both overstocking and stockouts.

  • Customer Satisfaction: Accurate inventory data means you can reliably fulfill customer orders, a key factor in maintaining customer trust and satisfaction.

  • Loss Prevention: Regular counting helps identify discrepancies, which could be due to theft, damage, or administrative errors.

Types of Inventory Counts

One of the key aspects of inventory management is understanding the different types of inventory counting methods. Each method offers unique advantages and can be chosen based on the specific needs of a business.

1. Periodic Inventory Counting

Periodic inventory counting involves counting all inventory at set intervals, typically at the end of a financial year.

Advantages: It’s straightforward and doesn’t require complex systems or constant monitoring.

Best For: Small businesses with manageable inventory levels or those with seasonal products.

2. Perpetual Inventory Counting

This system continuously updates inventory records after every transaction. It relies on technology to track stock levels in real-time.

Advantages: Offers up-to-date inventory information, helps in making quick and informed decisions, and reduces the chances of stockouts and overstocking.

Best For: Retailers with a high volume of transactions or those seeking real-time inventory tracking.

3. Cycle Inventory Counting

Cycle counting involves regularly counting a portion of inventory on a rotating schedule. Over time, the entire inventory gets counted without the need for a full physical count.

Advantages: Less disruptive to daily operations, identifies discrepancies more quickly, and allows for frequent verification of stock levels.

Best For: Businesses looking for a balance between continuous tracking and full inventory counts. Suitable for medium to large-sized businesses.

Choosing the Right Method

Selecting the right inventory counting method depends on various factors like the size of the business, the volume of inventory, and the resources available for inventory management. Technology plays a pivotal role in inventory counting, with systems like Uphance offering streamlined, efficient ways to manage stock levels.

Challenges in Inventory Counts

Inventory counting does have its own set of challenges. Understanding these challenges is key to implementing more effective inventory management strategies. Here are some common hurdles businesses face during inventory counts and how to address them.

1. Human Error

Challenge: Manual counting is prone to mistakes, leading to inaccuracies in inventory records.

Solution: Use barcode scanners and inventory management software like Uphance to minimize manual entry errors.

2. Time-Consuming Process

Challenge: Comprehensive inventory counts can be time-intensive, disrupting regular business operations.

Solution: Consider cycle counting, which spreads out the counting process over time, reducing disruption.

3. Unrecorded Transactions

Challenge: Sales, returns, or purchases not promptly or correctly recorded can lead to discrepancies.

Solution: Implement real-time updating of inventory records with each transaction.

4. Inconsistency in Counting Methods

Challenge: Variations in counting methods across different teams or locations can result in inconsistent data.

Solution: Standardize inventory counting procedures and provide thorough training to staff.

5. Accessibility and Organization of Items

Challenge: Difficulty in accessing or locating items, especially in large warehouses, can lead to incomplete counts.

Solution: Ensure proper warehouse organization and labeling of items for easier access. Also, ensure you use a robust warehouse management system.

6. Outdated Inventory Systems

Challenge: Relying on outdated systems can lead to inefficiencies and inaccuracies in inventory counts.

Solution: Upgrade to an advanced inventory system like Uphance that offers real-time tracking and analytics.

7. Balancing Counting and Customer Service

Challenge: Ensuring ongoing customer service and operations while conducting inventory counts.

Solution: Schedule counts during low-traffic periods or use cycle counting to minimize impact on customer service.

How to Prepare for an Inventory Count

Proper preparation for an inventory count can streamline the process, minimize errors, and ensure accuracy in your records. Whether you manage a small retail shop or a large warehouse, these preparation steps are crucial for a successful inventory count.

1. Set a Date and Communicate the Schedule

  • Choose an Optimal Time: Schedule your inventory count during a period of low activity, such as after business hours or on a slow business day. For many businesses, this is often at the end of a fiscal period.
  • Inform Your Team: Make sure all relevant staff are aware of the inventory date and their roles. This includes temporary staff if additional help is needed.

2. Assign Responsibilities

  • Create Teams: Divide your staff into teams based on their skills and experience. Common roles include counters, recorders, and verifiers.
  • Define Roles: Clearly outline each person’s responsibilities during the count to prevent overlap and ensure coverage of all areas.

3. Organize the Inventory Space

  • Clean and Declutter: Ensure that your storage areas are clean and well-organized. Remove any unnecessary items that could complicate the count.
  • Arrange Items: Sort inventory in a logical order, such as by category or alphabetically. Make sure all items are easily accessible.

4. Prepare Counting Tools and Equipment

  • Count Sheets or Scanners: Decide whether you will use paper count sheets, mobile devices, or barcode scanners for the count. Prepare these tools in advance.
  • Labels and Markers: Have labels, inventory count tags, and markers ready to identify items that have been counted, especially in larger storage areas.

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Best Practices for Effective Inventory Count

Inventory count

1. Plan and Prepare Thoroughly

Set a clear schedule for your inventory count and communicate it to all relevant team members well in advance. Ensure you have all necessary equipment, like barcode scanners, ready and in working order.

2. Standardize the Inventory Counting Process

Consistency is Key. Develop a standardized procedure for counting and train your staff on these methods to ensure consistency across the board.

Provide clear, written guidelines on how to count, record data, and handle discrepancies.

3. Segment Your Inventory

Break down your inventory into manageable sections. This makes the process more organized and less overwhelming.

Start with high-value items or those that move quickly, as errors here can have a more significant impact.

4. Leverage Technology

Utilize inventory software like Uphance to automate and streamline the counting process.

Consider systems that offer real-time inventory tracking for ongoing accuracy.

5. Double-Check Your Work

Encourage counters to double-check their work. Accuracy is more important than speed in inventory cycle counting.

Have a different team member verify the count to ensure impartiality and accuracy.

6. Review and Analyze Data

After the count, review the data for any significant variances and investigate discrepancies.

Use insights gained from each count to refine your inventory processes and address areas of recurrent error.

7. Schedule Regular Counts

Conduct regular inventory counts, whether annually, quarterly, or even monthly, depending on your business needs.

For ongoing accuracy, implement cycle counting, where a portion of the inventory is counted regularly.

8. Foster a Culture of Accuracy

Engage your team in the importance of accurate inventory counting and its impact on the business.

Consider incentivizing accurate counts to motivate staff and emphasize the value placed on precision.


Inventory counting is more than a compliance task; it’s a strategic business practice. By implementing best practices and utilizing tools like Uphance, you can maintain accuracy in inventory management, thereby driving success and growth.

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