While the physical inventory process might not be the most exciting way to spend a Friday night, it’s very healthy for the store. The process itself is simple: you scan each and every item in your inventory into Sidewalk Pro. After you’ve finished, Sidewalk Pro will have an extremely accurate idea of what items you have in stock, where they are in your store, and what they’re worth. You can use this information for everything from efficient inventory management to responsible tax reporting.
Even though physical inventories are simple, they aren’t easy. A few little mistakes during the session will create massive headaches for you down the road.
This document will give you our idea of the ideal physical inventory process, and then talk about common mistakes, temptations, and pitfalls that other stores have experienced, and what to do if you find yourself in a similar situation.
Let’s start with some recommendations:
- Do this after hours.
Physical inventories are worthless unless they’re accurate. For most store managers, this means that you can’t leave your scanner in the middle of a shelf to talk to a customer, unload a box of books, or yell at your receipt printer without losing your train of thought. If you’re trying to scan several thousand items, chances are that you’ll either make a mistake with the scanner or make a mistake with a customer. Neither option looks good.
- Don’t buy, sell, rent, receive or fulfill orders in your store while running a physical inventory. When you complete the physical inventory process, Sidewalk Pro will make that the new picture of your store—inventory totals, locations, and COGS.
Sidewalk Pro saves any transactional data that happens during the physical inventory process, so you’ll still be able to manage rental returns and serialized refunds. However, as with recommendation #1, this process is complicated enough that you have a greater likelihood of making a mistake if you’re trying to wear your cashier and physical inventory hats simultaneously.
- The quickest way to break the process is to transact with a non-serialized item. This one isn’t a recommendation. Sorry.
Here’s why: if you sell, buyback or rent a serialized item during the inventory, then Sidewalk saves that transactional history, and adjusts inventory counts accordingly. If you complete the same transactions with a non-serialized product, the system doesn’t know which item to move out of your inventory (a difficulty compounded if you have that non-serialized merchandise on several locators), which means the software will get in a big nauseous loop trying to resolve itself, which means it won’t be able to complete the physical inventory process.
You’ll be stuck, and have to start over.
- Get equipment that can move with you.
If you’re stuck with a wired scanner at a stationary POS station, you’ll need to lug items from every locator up to the station, scan them, and then drag them back. In the morning you might be more muscular, but you probably won’t be happy. Save yourself some trouble and get a mobile set up. It can be as simple as a laptop on a little cart with a USB scanner or as fancy as a wireless Bluetooth scanner and a tablet running our Android app.
If you’d like to use our Android app, give us a call or shoot us an email. It’s an easy little thing to download and set up.
- Embrace the tedium.
Grab a few pizzas. Stock a cooler. Blow the dust off your cassette player and slap in your Road Trip Mix Tape from the summer of 1986. You’re going to be spending a lot of time with a scanner and any applicable staff; you might as well have a good time.
Here’s how the physical inventory process works:
- You go to the Inventory menu, then click Physical Inventory, then Begin. You’ll need to have Manager or Admin status to do this.
- The Physical Inventory Cart will open. It’s purple.
- You scan a locator through its shelf tag. In the Locator box, Sidewalk Pro will tell you how many items it thinks are on the shelf.
- Scan each item on the locator once and only once. If it’s a serialized product, then you’re scanning individual serial IDs. If it’s non-serialized, you’re scanning quantities. Books and General Merchandise will drop into different sections of the cart.
- Once you’re done with that locator, scan another locator. That will start the process over.
- If you need to take a break, click Done For Now. To rejoin the process, go to the Inventory menu, click Physical Inventory, then click Join.
- Multiple users can be scanning multiple locators at once. Nice, right?
- When the whole process is complete, three things happen.
First, you click on the Inventory menu, then Physical Inventory, then hit Complete, and enter an email address.
Second, Sidewalk Pro moves inventory around. If Sidewalk Pro thought a serialized item was on one shelf, but you scanned it on another, the system will create an Inventory Misplaced transaction to move the title to the right spot. If Sidewalk Pro thought you had 10 shirts on a shelf, but you really only have 3, the system will create an Inventory Missing transaction, to move those 7 items to Lost. From Lost, they won’t affect any of your reporting or inventory counts.
Third, Sidewalk Pro creates a Physical Inventory Report, which is a list of all the Inventory Misplaced and Inventory Missing transactions.
This is a huge process for the software, about as resource-intensive as it gets. Because of that, completing a physical inventory might take a while. You’ll still be able to log in and jump around while the software’s thinking, but you might experience delays. This is another reason why we recommend running this process after hours.
- Extra Credit: Right after you’ve finished the Physical Inventory process, there are two other reports you might be interested in running, both found under the Reports menu in Inventory Reports. Textbook Inventory Valuation by Location Detail will tell you (as you might have guessed) the value of your textbook inventory. The GM Inventory Value Report Detail will do the same thing for your general merchandise.
Let’s pretend for the sake of purely hypothetical argument that the ideal process didn’t happen. Maybe you sold a non-serialized item. Maybe you pressed the big Complete button way too early, and now the software thinks that you only own one book and a child’s sized hoodie. Maybe your mix tape spun out of control and magnetic tape is gushing out of the cassette player.
We can help you with everything but the mix tape (though, on second thought, winding a pencil in the cogs used to work). This section of the document lists several common mistakes and questions, how bad they get, and what to do about it.
- I sold a non-serialized item while doing my physical inventory!
You can check the recommendations above to see why this is bad, but here’s the upshot: the system won’t be able to resolve, and the physical inventory process won’t complete. Game over.
Start the process again from the top.
- I received a shipment during the inventory!
If you received a shipment through the Intake or Quick Intake process, those items will have jumped right into the Intake locator. If you haven’t scanned that locator yet, then this isn’t too bad. You’ll get an accurate inventory count once you scan Intake. The items just might not have a cost associated with them. Keep track of the cost, and talk to us.
- A truck came and dropped off a box of merchandise…does that count as receiving a shipment?
No. But you get points for worrying. Don’t click Supplier Receive by PO or Supplier Receive Without PO, and don’t scan the items during your physical inventory. Once the process is complete, receive away!
- I fulfilled an order during the inventory!
If you have a choice, we’d recommend waiting to fulfill orders until you’ve completed the inventory. If you did fulfill an order for a serialized product, don’t worry; Sidewalk Pro will keep track of those transactional details for you.
- I want to do this thing over multiple days. How bad is that?
We don’t recommend it, if you’re going to be open for business for some of that time. Read over the first four answers before you decide to go this route. If you’re fine with taking those steps in the event of one of those transactions, then go for it.
- My internet/electricity/plumbing went out in the middle of a physical inventory. How bad is that?
Since Sidewalk Pro is cloud-based, a power outage shouldn’t affect your physical inventory. But let’s be sure. When you get your connection back online, go to the Inventory menu, click Physical Inventory, and instead of clicking Join, click the Report. The system will run the Physical Inventory Report as if you had just completed the process. Look for the last locator you scanned before the power went out. If it’s not on the report (meaning that all the items you scanned in that locator were items the system expected you to find there), or if the locator is on the report, but only to note Inventory Misplaced or Inventory Missing in a way that’s accurate to what you last scanned, then you’re good to go.
If you do see trouble of any sort, you’re welcome to give us a call. We’ll talk through the report together, and between us we’ll figure out how bad the damage is—whether you can just scan the last locator you lost, or whether you’d rather start from the beginning.
The plumbing—that’s pretty bad. We feel for you.
- I don’t want to tell you what I did, but I need to start over. And then I need you to forget that we ever had this conversation.
Fantastic. Really. You can run a physical inventory as often as you like, since each completed inventory will replace the old one in the software’s mind. If you have the time and equipment necessary to do this again, and you’ve figured out what gummed up the process last time, then you’re welcome to start fresh.