A good count process will improve the accuracy of your inventory. Accurate inventory is essential for the sales team, brewing team, and your customers.
A good inventory count scorecard will measure how well your process is working. It measures the relative accuracy of inventory and serves as a tool to analyze variances.
In this post, we’ll walk through a count process and inventory count scorecard you can use in your brewery.
Inventory Count Process
The basic tenets of a good inventory count:
- Planning and preparation
- Execution
- Analysis of results
#1 Planning and preparation
First determine a day/time to conduct the cycle counts, and inform all employees about it. This way everyone can all work to make the count successful (for example, not moving any inventory at the same time counters are working).
Prepare the warehouse and control the count environment. Ensure it is clean and organized. Keep activity to a minimum, such as moving pallets or kegs around.
Identify the counting team. Ensure that experienced people are doing the counting. Provide training on the process, ensure the team understands.
Have one leader to control the count. One person needs to be in charge and responsible for the orderly execution of the count.
#2 Execution
Create and communicate rules and guidelines for the count. For example, execute the count following these procedures:
Re-counts. Any count variance over 10 kegs, or 5% of total kegs will be re-counted by a different person than the original counter.
Posting adjustments. All inventory adjustments will be posted in the computer system as soon as the count/re-count is completed.
#3 Analysis of results
A key step in the inventory count process is to analyze the results. How did we do? How accurate is the inventory (the physical count compared to the system inventory)?
Investigate variances, determine causes, implement/recommend process changes as necessary.
Communicate the results to the count team. Post the results so everyone can see them. This allows for more eyes on solving the problem.
Inventory Count Variance Scorecard
Once the count is complete, use an Inventory Count Variance Scorecard to summarize the results. Compare the total inventory value to the counted inventory variance. For example:
- Total inventory value: $1,000,000
- Variance in inventory count: $15,000
- Inventory variance: 1.5% (inventory value divided by variance)
Compare the variance to historical inventory count results. Is a 1.5% variance better or worse than previous counts? Which items in the count have a higher variance than others?
Wrap Up + Action Items
Inventory accuracy is important for all facets of your business – sales, operations, and customers, to name a few. Use an inventory count process to ensure an accurate count. Create an inventory variance scorecard to measure the accuracy of inventory.
P.S. Learn more about the network of beer industry financial professionals: the Beer Business Finance Association. We talk about brewery inventory, cost reduction and cash flow all the time!
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