As you likely know, tracking inventory levels can be tedious and time-consuming. However, it’s an essential part of the business that shouldn’t be overlooked. Why? Inventory is money – and that means control is necessary to run the business effectively.
From production to management, all levels of your business depend on some form of inventory tracking, including the owners, who need to be able to understand how their money is working for them versus how much inventory is tied up on the shelf. It’s also important on an administrative side, as accountants, tax advisors, and winery compliance admins need to know the status of stock in order to produce accurate reports and tax filings.
Discipline is key!
Think of your inventory as a bank account. Like a bank account, your inventory has deposits (inbound) and withdraws (outbound) – and each is carried out essentially as a type of “transaction.” If you don’t keep an accurate track of your inbound and outbound transactions, your inventory will be off when it’s time to reconcile.
With that in mind, discipline is key to managing your inventory successfully. If you’re only tracking some types of inventory or not doing it consistently, you’re missing out on valuable information – and potentially, money!
Reconcile your Inventory
Reconciling inventory isn’t a job anyone really wants to do but reconciling the current inventory against your previous counts will often help you discovering discrepancies that could be costing you. Here are a few steps to take:
- Establish your starting inventory with a thorough count.
- Determine all the ways you have inbound and outbound movement, including sales, receives, transfers, and samples and breakage.
- Track each type of movement as it happens to make sure nothing is overlooked. Make sure everyone on the team is aware of your inventory tracking efforts and doing their part.
- Reconcile your inventory regularly – once a month is ideal!
- Make sure not to re-count inventory that has already been sold but is still waiting to be fulfilled, like wine club pickup orders or other pending shipments.
If you have a large number of items, you may also want to consider splitting your reconciliation into cycle counts. So if your winery offers wine and merchandise, count your wine once a month and your merchandise once a quarter.
Do you find you’re consistently off on your counts? You may want to think about performing more frequent physical inventories. A bi-weekly or even weekly inventory will help you keep a closer eye on movement and will give you a better chance of discovering where the discrepancies are coming from.
Some other types of routine maintenance that can help simplify your inventory tracking include:
- De-activate items that you no longer carry.
- Review the cost of each item and update it to ensure you have accurate cost of sales and cost valuations.
- Keep items that have been paid for and waiting for fulfillment in a separate area from the rest of your inventory.
If you have discrepancies, there are many things you can do to improve the situation – but it all starts with knowing whether you have a problem or not!