The following are our teams’ best practices for taking a Retail physical inventory gathered over hundreds of implementations.  Following these guidelines will ensure your team has the most successful time completing your inventory.

Foundational Decisions and Approach

      Before you do your first physical, your business need to determine and decide how to handle the following:       

1.  Establish a culture of seriousness around physicals.  You have 100K+ of money on the floor.
2. You are Asset Managers – not buyers

1.          Frequency – how often will you take inventory (weekly, monthly, quarterly) - Monthly is recommended

1.  Day of the week you will take inventory - pick the least stressful day, change as needed - consider deliveries, sales, etc.

• Time of Day – Recommended that you start once the business is closed or before open.

1. Time Deadline – Done that end of day or by x the next day

1. Establish your Physical Approach

o   Kick Off Meeting

o   Locations and Assignment

o   Scan Each Tag or Scan and enter qty?

o   Problem Items – How to handle/notate, where do you take those items, who resolves?

1.          Determine your Thresholds

o   Depends on your ownership/accounting team

o   When will you recount and what is the criteria?

o   Does the time spent investigating a variance provide return?

o   What is your acceptable variance – 3%, 2%?

1. To UPC or Not UPC – Will you add UPC codes to items and allow them to be scanned?

1. Handhelds – Get them.  1 Per Person.  They cost justify in 1 to 4 months

1. Cycle Counts

o   Adjust frequency to your high variances – High = Monthly, Low = Quarterly, (don’t go a long time without resolving variances – the bigger they are, the harder they are to figure out)

o   Create schedule of when to cycle count and what to count

1. Labels - Get the right labels for all products

o   Small products are the easiest to mis-ring so ensure you have good labels for these

1. Open Items – Create a policy of when and why to use the open item button. 

o   Determine how to correct these. 

§  Suggestion:  If item does not ring up, put second same item in “problem” bucket and resolve latter when you have time

1. Reporting - What are the reports that need be generated after each physical
   

Physical Inventory Checklist:

·         We have included a Physical Inventory Checklist that we recommend be included in your process. Completing this checklist with every inventory, will guarantee your team has an efficient and productive inventory.

 Physical Inventory Checklist

Outlet (s)            _____________________________        Last Months Ending:                              __________

Staff Member:     ____________________________         This Month Actual Revenue                    __________

This Month Variance Budget Amount/% _______/___

Physical EOM      _________________________            This Month Actual Variance Amount/%    ______/____                                               

Pre-Physical Checklist

1.  Set time to start physically counting outside of business hours

o    Date: ________ Time: ________

1. Confirmed all invoices/receipts entered in Yellow Dog (Committed)

1.   Confirmed AP has also entered all of these in AP (3-Way match of Vendor Invoice stapled to YD Invoice stapled to AP Invoice)      

1. All damages/shrinkage adjustments entered at least one day BEFORE your do physical   

1. Handheld prep

o    Ensure units, and any backup batteries are fully charged

§  Ensure Count XL application has latest version installed

o    If 520s, or Docked version are being used confirm pre count sync happened

1. Printed negative on-hand report day BEFORE physical.  Resolve negatives before taking physical.

1. Straighten up/tidy up inventory areas. Move product to where it should be.

Physical Checklist

1.  Setup problem item table (or process to deal with items that won’t scan)

1.       Printed Count Sheets, assigned to staff

1.       Assigned Data Collectors

Review of Physical (Before Committing)

1. Print POS Sales Report for month to help audit

1.         Have last month’s ending inventory and this month’s budget COGS amounts to validate actual COGS for this month before committing.

1.         All counts added to Physical

1.         Sort by “Variance Cost (Descending), Item”, review and recount as needed

1.        Review and recount as needed all “zero counted” items

1.         Sort by “Variance Quantity, Item.  Review and fix any positives

1.         Once you’re within your threshold for Variance, commit physical.

Post Physical Checklist

1.    Print Detailed by Select Physical Report

1.         Print COGS By Department Report

1.         Hand in this sheet (per outlet and the above 2 reports) to your supervisor