With owning inventory comes also the responsibility to confirm its existence and obviously also the fact if everything in storage is also accounted for on the balance sheet. The way to do it is to perform stock counts every now and then. Depending on the stock level (i.e. how many items there are) and also the turnover and nature of the goods, it may be that stock counts are done on monthly basis or only once a year.

Normally in large production companies with thousands of items on their stock listing the stock counts are done more frequently than in companies with minimal stock. Also the lower the stock turnover the less frequent are stock counts obviously. As a general rule, the stock count needs to be done at least once a year and close to the end of the financial year.

The reason behind this is that you want to be sure of the stock levels on your annual financial statements so hence the closest date you pick to the financial year end, the better.
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Companies with stock struggle daily with appropriate stock levels – they need to ensure enough items are in stock to satisfy the customers and on the other hand make sure any article isn’t just piling up and ageing in the warehouse. The stock levels need to be optimized, but how to best achieve this?

There are two things we have found to work best in practice – regular review and responsibility.

What we mean with ‘regular review’ is really a weekly or a monthly (essentially as often as needed and reasonable in your industry) meeting where the stock levels are compared with sales, new minimum stock levels determined, action plans decided for slow moving goods etc. With this the stock levels are under a constant monitoring and provided that warehouse responsible personnel as well as sales and management team is involved, proper actions are decided and taken.
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For numerous reasons – no space of your own to storage goods, outsourcing efficient and top of the line storage service, unwillingness to deal with storage maintenance and related equipment and services on your own – whatever the reason may be, there are types of goods and types of companies who use outsourced service to storage their goods and materials.

Whilst this saves you more space, time and almost certainly inventory dealings like handling, shipping etc, there are still a couple of things you should be aware of when having inventory held by third parties.
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