What is Inventory Counting?

As manufacturers, you are required to keep a constant count of inventory consisting of raw materials, sub-assemblies, parts, semi-finished and finished goods. The entire process of physically verifying, and counting each inventory item is called inventory counting. 

Inventory counting is usually done to,

  • Identify inventory management issues such as stocking errors, damaged goods, pending orders, stuck orders, etc. 
  • Identify issues pertaining to relevant processes under inventory management and fix them.
  • Identify product categories that are not moving compared to other categories and devise an appropriate sales strategy. 
  • Control inventory procurement and prevent over-stocking or under-stocking.
  • Identify misplaced goods, thefts, etc. 
  • Maintain proper inventory records for audits and inventory valuation.

How are Inventory Counts done?

There are various methods used by manufacturers to conduct inventory counting. 

Periodic Inventory Counting

Periodic inventory counting is a planned activity done once or twice a year depending on the enterprise’s policies. In this method, the manufacturing enterprise closes down its production unit, warehouses, and retail stores for a certain period of time, and conducts physical counting of inventory items that currently exist within their premises.

While it is an accurate method of counting and evaluating inventory, it means that the enterprise has to dedicate all of its resources i.e. time, money, and manpower to the activity. They also stand to lose crucial production time along with sales if done during the day and pay additional overtime wages if done during the night. 

Cyclic Counting

Compared to periodic counting, cyclic counting is done in cycles for certain products or a category of products. The other products/product categories are counted in other different cycles/times. Each category/group is assigned a different counting cycle depending on their requirement on the shop floor. 

This method is resource effective as it can be done by a small set of people and takes less time, money, and energy. Moreover, there is no need to halt production, and sales and shut down entire units, warehouses, stores, etc. to perform inventory counting.

Cyclic counting is the most preferred method by manufacturers as it carries a lot of advantages over periodic counting. 

Ad-hoc Counting

Ad-hoc counting, as the name suggests is conducted immediately after an issue is detected with the inventory. This is an unplanned counting activity and is done only if a situation demands it without waiting for the next counting cycle.

How does ERP software make inventory counting easier?

An ERP software, through its comprehensive, integrated modules can help manufacturers automate the process of inventory counting and help them reduce costs, time, and manpower. 

Let us see how it’s done.

Barcode & RFID Integration

An ERP can be easily integrated with bar-code and RFID systems. During goods receipt, personnel can use portable printers to quickly print bar code labels and apply them to the goods. These are then scanned using portable bar code scanners and the data is stored in the ERP’s centralized database. This way, manufacturers have a comprehensive record and count of items that have been received and the ones that are already in stock. They also eliminate manual methods of inventory recording and resultant human errors. 

Warehouse Management

With ERP’s warehouse management feature, personnel can allocate these items to a particular section within a warehouse and track their movement within and outside the warehouse. 

They can track the shelf life of each material, allocate storage bins based on categories (item types) & other classifications, instantly record material details on arrival and conduct inventory counting using cycle count or full inventory methods. During counting operations, personnel can use various parameters such as item type, location, and warehouse to quickly track and count items. 

Lot Control

Inventory counting becomes a lot easier when each item has an identity of its own. Manufacturers can assign SKU codes and lot numbers to each item. They can assign lot numbers that contain source location, expiration dates, date of procurement, etc. Lot management can be used to identify and track perishable goods, harmful products, and commodities with an expiration date. 

With lot numbers and SKU codes for each product, it becomes easy for personnel to conduct inventory counting and track each item quickly. 

Real-time Data Visibility

An ERP provides comprehensive, real-time data visibility to the entire organization. Constant inventory updates are visible to the entire supply chain thereby providing a clear picture of how much stock is available for production and delivery. 


Manual methods of counting inventory are time-consuming, replete with risks, and often inaccurate. In today’s competitive world, manufacturers have to adopt smart measures to count inventory accurately and quickly. Automation is the key and they have to adopt technology to streamline workflows in order to reduce time and costs. 

OmegaCube ERP has a comprehensive inventory management module that helps manufacturing and distribution enterprises to quickly and accurately count inventory. 

Contact us for an in-depth demo!