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Inventory Count Systems

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Inventory Count Systems

Firms that produce and sell goods to customers usually keep a stock of their items in their

warehouses, called an inventory. Companies frequently compare stock in the company's stores

and warehouses to report the list recorded in the company's books using inventory count systems.

Although reliable inventory data is the end objective of both cycle and periodic counts, they

handle it independently; the following is their comparison.

1. What are the differences of the two count systems?

Periodic counts are planned inventory counts that happen regularly, monthly or quarterly.

Contrary cycle counts describe an ongoing process of periodically counting a limited fraction of

inventory items (DeHoratius et al., 2020). Compared to periodic, which provides actual counts of

every Item in the inventory, cycle counts regularly present the count of a select few items.

Reliable and detailed information annually. Regarding work personnel, periodic counts may

require the undivided attention of many workers and some temporary staff. In contrast, cycle

counts may be the duty of a committed group of staff members and integrated into certain

employees' obligations.

A cycle count inventory system cannot update its entries manually because there could be

dozens of transactions only at the store level during each accounting cycle. On the other hand,

for minimal inventories, a periodic inventory system's flexibility permits the employment of

written records. In a regular inventory system, the data is gathered at such a top standard that it is

almost hard to trace accounting records to ascertain why some stock inaccuracies happened. On

the other hand, a cycle inventory system makes conducting these types of inspections

considerably simpler because all activities are detailed up to the operational level.
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2. Discuss options and activities (outside of physical counts) that warehouses can

adopt to ensure accurate inventories are maintained at all times.

To maintain accurate inventory at all times, warehouses can choose from various

alternatives and actions, such as: Putting inventory management software into practice where

warehouse managers may complete inventory transactions and audits with the aid of

the software, providing accurate data and minimizing errors. Additionally, reducing typical faults

brought on by improper handling and storage is made possible by ongoing employee training,

which keeps warehouse staff members aware of effective inventory management processes and

methods (Fang & Chen, 2021). Moreover, automating data entry with barcode and RFID

technologies can do away with the necessity for manual data collecting, which lowers the risk of

mistakes. Lastly, establishing a cycle count procedure may assist stores in maintaining records of

stock levels rather than depending exclusively on physical inventory counts. In this procedure,

inventory levels are regularly adjusted based on samples of products taken at random.

3. What are some causes of data discrepancies between physical counts and data

stored on computers?

Physical counts and information saved on computers may differ for various reasons,

including errors during physical counts, incorrect counts, misplacing, or labeling of inventory

items. When updating inventory data in software systems, incorrect information input or

screening problems. Another reason is the problems with hardware, software, or the operating

system that could result in data loss or corruption, burglary, theft, or other illegal activity that

may cause inventory losses or erroneous inventory data recording. Incorrectly handled exchanges

are also a source of inventory disparity. You receive a false record of the return when returned

items are wrongly recorded and added back to inventory stock. Warehouses should control
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inventory levels, prevent errors, and sustain high levels of information correctness by

implementing these extra actions and alternatives.

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References

DeHoratius, N., Holzapfel, A., Kuhn, H., Mersereau, A., & Sternbeck, M. G. (2020). Evaluating

Count Prioritization Procedures for Improving Inventory Accuracy in Retail Stores.

SSRN Electronic Journal, 6. https://doi.org/10.2139/ssrn.3661481

Fang, X., & Chen, H-C. (2021). Using vendor management inventory system for goods

inventory management in IoT manufacturing. Enterprise Information Systems, 16(7), 1–

27. https://doi.org/10.1080/17517575.2021.1885743