What exactly does it mean to take physical count of your inventory?

The aim of taking a physical count of inventory boils down to making sure there’s complete parity and accuracy between:

-The actual stock quantities sat in your warehouse or store(s) for each item of inventory (and its variants).

-And the recorded stock quantities in your inventory spreadsheets or inventory management software.

This helps prevent overselling at one end of the scale, but also ensures you aren’t needlessly re-ordering inventory at the other. Plus, there’s the small matter of getting inventory valuation right for your tax returns.

In short – It’s crucial for any retailer or warehouse operator to regularly make sure the recorded inventory matches up with actual inventory for every single SKU.

There are two broad options you’ve got for taking a physical count of inventory:

Manual inventory count. This traditionally involves pausing activity at location in order to conduct a planned count via paper lists and sheets to record numbers manually.

Digital inventory count. This involves using a smartphone app and/or barcode scanner to check and record numbers into a centralised inventory system electronically.

1) It’s important to plan ahead

Whatever methods you use and however regular you conduct them, make sure to schedule your counts well in advance.

It’s worth noting when your typical sales down curves are and scheduling for then.

For example:

Many retailers will find that end of January is a slow period. Whereas the run up to Christmas is definitely not a time you want your staff to be burdened with a large inventory count.

Get your counting date(s) in the diary, then:

-Assign any extra shifts to relevant employees.

-Notify your team.

-Let customers know if you’ll be closing a physical store during business hours.

If doing your count manually, then you’ll need to shut down activity at that location for its entire duration. No stock should be moving in or out at any time to ensure complete accuracy.

2) Be familiar with your warehouse layout

Counting the inventory within a store or warehouse is infinitely easier when you have a clear map of everything in that location.

Sketch out every:




-Display unit.

-Work station.


-And anything else relevant for the location in question.

So, you should end up with a clear bird’s eye picture of everything in there. You can then number each display, rack and shelf to signify different sections.

3) Train your team properly

Counting inventory may sound like a pretty straightforward task. But there’s a lot of procedures and systems involved when done right.

And the staff members need to know exactly what these procedures are and how they work.

-Organise a training session before the date of your count.

-Allow time for a training session on the day before any counting begins.

This will take your team members through aspects like how to count effectively, what forms will be used and how to use any equipment involved.

4) Organize your team

So by now you’ll have:

-A dedicated team of people shifted to work on the day of the count.

-A clearly dissected, mapped and labelled warehouse.

-An adequate number of inventory count tags to use.

Now it’s time to break your team into counting partners. This means breaking your team into pairs. Then assigning each pair to their own section of the warehouse.

One person is typically responsible for actually counting the inventory in each bin location of that pair’s section. While the other marks up the count tags with relevant information.

Tags are then returned to a central inventory clerk, who will verify them and assign that pair another warehouse section to count.

5) Move to cycle stock counts

Moving to cycle stock counts can be a serious game changer when it comes to warehouse efficiency.

This is where your team is assigned ‘partial’ stock takes or inventory counting tasks to complete on a regular, continuous basis. Meaning your inventory gets counted in chunks throughout the year – without the need to shut down activity for one big annual count.

6) Counting with barcode scanners

Using barcode scanners for cycle counts adds yet another layer of efficiency into your physical inventory checks.

This completely eliminates the need for tags or messy paperwork. And allows your team members to complete their weekly counting quotas quickly and accurately.

To sum up

Is it actually worth taking a physical count of your inventory? Well, we would think so, yes. Ideally, you should take a physical count of your warehouse inventory every three months or so. But by using the methods above, such as counting with barcode scanners or moving to stock cycle counts, you should be fine with one single large physical count every 12 months or so.