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Inventory Forecasting Best Practices

1. Use weekly cycle counts for an accurate inventory.

No matter how careful you are, there will always be odd errors that creep into your inventory control system. It’s important to regularly reconcile your real-world inventory with the numbers in your system. Try weekly cycle counts (i.e. stocktakes) in which you spend some time every week checking one or two product categories, preferably those that are stored close to each other for efficiency. Using this continuous cycle counting, aim to cover all product lines at least once every four weeks.

2. Keep track of write-offs and gifts.

Your business may occasionally sponsor events or donate to charities. When you do, purchased products go out the door without sales attached to them. These write-offs need to be managed carefully in your inventory control system in one of two ways:

  • Create a new customer in the system and add the donated items to a zero-value sale. This method enables you to see the total cost of your donations over time.
  • Reduce your inventory using the inventory correction process in your system. If you have a more advanced system, you may be able to create correction codes for future reporting on your total donation cost.