So your first step in preparing for your physical inventory is to explain, to everyone who will participate, why a physical inventory is necessary. Accurate Physical Counts Contribute to Better Customer Service Everyone in your organization must realize that the primary purpose of a physical inventory is not to please your accountant or the Internal Revenue Service. It is to verify that the on-hand quantity of each item in your computer reflects what is actually on the shelf. Salesmen need to be able to trust the accuracy of the stock quantities in your computer. Just as important, your customer can get on with his business.
Most computer systems produce very impressive buying reports.
These reports show you how much of each item the computer thinks is in each warehouse, how much will be demanded by customers in the near future, and how much should be ordered from a vendor or central warehouse. No matter how sophisticated the software, the wrong quantities, of the wrong products, will be ordered. If there is more of an item in the warehouse than is reflected in the computer, the product will be ordered too soon, and the company s money will be tied up in products you don t really need. Worse, if the on-hand quantity in the computer exceeds what is on the shelf, the product will not be ordered at the proper time, and a stock out may occur. If a buyer has to make replenishment decisions with inaccurate stock balances, he cannot succeed.