How To Avoid Inaccurate Produce Inventory Counts

Inventory errors in the produce industry are quite common. That’s not to say produce wholesalers do not understand the importance of accurate counts, but with many produce businesses using traditional methods for inventory management, staying on top of the inventory and ensuring that the counts are accurate can be a challenge at times.

Yet, inaccurate inventory count is one of the biggest causes of wastage in the produce industry. If business owners do not know the exact quantity of produce on their shelves, they risk overstocking. Considering that 50% of produce in the United States is wasted, it’s important to begin to look at how to tackle one of the root causes of this produce wastage—poor inventory management.

With an inventory management solution like Silo, wholesale distributors can reconcile both inbound and outbound orders in real-time. They can also track lots and get visibility over every lot in their warehouse. Check out this link (https://usesilo.com/customers/wholesale-distributors) to learn more about this efficient inventory management solution.

What is inventory management?

Inventory management in the produce industry is a system for taking stock of what produce comes into the warehouse facility, what leaves, and what’s leftover. A good and efficient management system should be regularly updated, so the wholesaler knows what stock needs replenishing and which types of produce are overstocked.

Overstocking and understocking are two commonly used terms in inventory management. Overstocking, also known as surplus stock, happens when a stock is stored away more than it sells, while understocking is the opposite. Keeping accurate inventory counts helps keep the stock under control so that neither overstocking nor understocking becomes commonplace.

How to calculate the accuracy of inventory counts

Inventory accuracy is a metric used to measure how well your produce business’s inventory in real-life matches what you have on the warehouse stock record. There are two main methods of calculating inventory accuracy: inventory valuation and physical inventory counting.

1. Physical inventory counting

Physical inventory, also known as inventory reconciliation, compares the physical count of the number of products you have on hand with what is contained in the record. The inventory is accurate if both numbers match and inaccurate if they do not.

It is helpful for small warehouses where the order volume and total units are low.

2. Inventory valuation

This is an inventory accounting technique used to determine the accuracy of the value of the unsold stock when preparing a financial statement. It involves dividing the quantity of produce realized after count by the number of units in the inventory spreadsheet and multiplying this value by 100.

The higher the percentage value, the greater the inventory accuracy.

What to do to eliminate inaccurate produce inventory counts

1. Improve your shelving process

An organized warehouse where produce is properly shelved can help eliminate inventory count errors. Workers should be properly trained to return failed deliveries or items that were wrongfully picked back to their rightful places on the shelf.

A good inventory practice is keeping produce with similar lot numbers in the same location. The more randomized the packages are stored, the greater the chances of misplacing or losing one or two.

2. Assign inventory responsibilities to specific individuals

There’s a huge chance of having inaccurate produce inventory counts if multiple people are responsible for this role, especially in a produce business that is not using inventory management software. 

Assigning inventory responsibilities to a specific individual will do a lot of good. Since that’s their specific responsibility, they are more likely to take inventory counts carefully.

3. Scheduled cycle counts

Cycle counts in produce inventory management are periodically counting your stock so you can stay on top of your stock levels without necessarily disrupting operations. 

The process typically involves dividing the stock into smaller groups of produce that need to be counted. The stock may be divided into various groups based on supplier, type of produce, or lot number. Dividing this into smaller groups based on these categories generally makes counting easier.

Still, this method is considered a little bit laborious, especially where large stock is involved. ERPs or inventory management software is recommended instead.

4. Track inventory using an ERP

Many inventory inaccuracies are due to human errors in record keeping. Investing in the right technology makes you less prone to these errors. Begin with tracking inventory with barcode scanners and Enterprise Resource Planning (ERP) Software. 

The barcode scanners scan the barcode labels on each produce pack, and all information pertaining to the item is automatically logged on the ERP’s database. The scanners are used to keep accurate stock counts by scanning each produce that comes in or leaves the warehouse.

ERPS will help ensure that:

• Your inventory is synchronized with your invoicing and payment processes.
• Inventory counts are always updated since they are taken in real-time.
• You can compile real-time inventory data to produce data-driven business insights.
• You are neither understocked nor overstocked at any point in time.

Reconciling inventory records

It’s time to reconcile your inventory records if you still notice a discrepancy between your inventory record and a physical count after following the above guidelines. 

If the physical count doesn’t match what’s in the record, you might have to adjust the record. Sometimes, the discrepancy may not be due to inaccurate logging by your employee but several other issues like theft. 

Conclusion

Errors are bound to happen so long as your inventory process is manual. Automating your inventory process will help you have accurate counts of each type of produce in your warehouse.

The comparative cost advantage of implementing or integrating an ERP into your workflow is huge. You could lose even more to spoilage when you overstock because of inaccurate inventory counts. 

In addition to automating inventory counts, specialized fresh produce ERP solutions help create invoices, calculate loads and weights of produce packages for truck packing, accurately report finances, and synchronize all inventory, sales, and accounting-related information.