The Hidden Costs of Quarterly Inventory Counts
Why Frequent Inventory Scanning Elevates Efficiency and Savings
Automated inventory tracking is now a reliable and efficient technology that is proven to reduce the labor required for manual inventory counting by 90% or more. The positive impact of automated inventory is also not restricted to saving on manual tasks and improving the results of these tasks: in reality, the real value of automated inventory tracking comes from added frequency and targeted tracking. With these specific capabilities, what has long been considered a procedural exercise turns into a significant differentiator for 3PLs, retailers, and manufacturers who seek to not just count inventory, but to transform inventory tracking to elevate efficiency and savings.
When done with frequency and precision, inventory counting ensures real-time accuracy, boosts operational productivity, and enhances customer trust. Infrequent quarterly counts, still an all-too-common practice, directly undermine these goals. This swims against the current of the rapidly evolving world of modern supply chain management where leaders thrive on agility and real-time adaptability. Even as the power of real-time data has enabled massive changes across the industry, many organizations continue to rely on quarterly counts that offer only past-tense, retrospective insights that come to light too late to take meaningful action. This gap creates a space where errors thrive—undetected and unchecked—and snowball into significant financial and operational challenges.
One of the most significant barriers to change is the outdated belief that quarterly inventory counts are ‘good enough.’ Though there was certainly a time when infrequent counts were considered reasonable, now that self-flying inventory drones offer a fast, cost-effective approach to counting inventory as often as daily, the time has come for organizations to reconsider and rethink their approach to how—and how often—they count inventory in the warehouse.
Quarterly counts might seem adequate, but the hidden inefficiencies and costs they introduce can be staggering. Here’s the reality:
- Time lapses drive up error accumulation
Every day that passes between each quarterly count, errors can and do occur. The longer these errors persist, the more complex they become—and the more difficult it is to unravel and correct each issue. By the time a quarterly count uncovers a misplaced item (often weeks or months after the error has occurred), countless hours have been wasted searching for it, causing orders to be delayed or unfulfilled and employees’ frustration to escalate.
- Old data is not sufficient
Imagine relying on a GPS that updates your location every 15 minutes instead of in real-time. With outdated data in the GPS, your ability to know if you were on the best possible route would decrease dramatically. Similarly, when inventory data isn’t updated regularly, workers in the warehouse can’t trust that data to be correct. They double check, second-guess, and often manually verify product locations.
- Unseen financial leaks accumulate
Consider the repercussions of a misplaced pallet. Every day that pallet goes undetected, it is potentially incurring costs—from incorrect orders shipped to customers, to extra labor hours searching for the missing item, to resolving the issues it creates. Counting inventory quarterly allows costs to accumulate unchecked for months.
- Full counts disrupt warehouse operations
When inventory is only counted quarterly, there is a tendency to rely on extensive wall-to-wall counts. These can be incredibly disruptive, often halting operations completely until the task is done. More frequent cycle counts can minimize, or even eliminate, the need for these large-scale interruptions.
- Opportunities for improvements are lost
Errors are lessons in disguise. But if these lessons are only presented four times a year (and especially if the majority of the opportunities for learning never even come to light), countless opportunities are lost to refine operations by training workers how to avoid errors in the future—leading to the same, avoidable mistakes happening repeatedly.
- Customer confidence is at risk
In today’s age of instant gratification, customers expect swift and accurate deliveries. A single putaway error, magnified by quarterly counting, can easily lead to incorrect or partial shipments, backorders, or delays. This not only incurs added costs but also risks tarnishing the brand’s reputation.
In today’s dynamic warehouses where hundreds and thousands of pallets are throughput every day, change is constant. Existing inventory is moved out. New inventory is moved in. Pallets are moved from one location to another out of urgency or other necessity. Quarterly counts simply can’t capture this level of action and fluidity.
At Verity, our clients have proven this to be more than just a theory. Collective data from dozens of installation sites make it clear that the warehouses where inventory is counted most frequently based on the number of pallet movements in the warehouse have the least number of uncorrected errors, exhibit the greatest level of cost savings—including up to 40% reduction in lost goods—and show significant improvements in productivity, resulting in freeing up the equivalent of up to four full-time employees.
These results speak for themselves, but they also call out the fact that inventory is no longer a static entity, rooted firmly to pallet locations. In the warehouse, inventory is perpetually in motion, so merely pinpointing its location in a single moment in time is equivalent to capturing a single frame of a movie but losing the broader narrative.
To harness the greatest value from inventory data, it is crucial to track each pallet’s movement through the warehouse, and to continue to track and check inventory as each new movement occurs. This can only be achieved by scanning multiple times per movement to ensure every change—and every error—is identified and corrected before it snowballs into a larger issue.
In the past, there was good reason that such measures were never even considered: when inventory tracking relied on human labor, increasing the frequency of inventory counts would have represented an enormous cost and an even worse disruption to warehousing operations. But times have changed. Today, lightweight, automated inventory tracking systems enable this revolution without hindering normal operations. By focusing on tracking the moving items and not their placeholders alone, inventory managers can quickly solve problems, use resources wisely, and better meet customer needs.
Frequent inventory counts
Today, warehouse operators must be better than ‘good enough.’ They must lead the charge. Sticking to the outdated approach of quarterly inventory counts is like trying to navigate a superhighway with a hand-drawn map. The tools we have today, including fully autonomous inventory drones, are game-changers. They challenge old norms and usher in new ways to supercharge efficiency.
To thrive in a world where technology is enabling faster, more efficient movement of product through every point in the supply chain, companies must embrace the dynamic nature of inventory in motion. Adapting to the rhythm of that movement and counting inventory as often as possible helps ensure data remains accurate at every pivot, capturing the entire story and not just the fleeting frames. Verity’s autonomous inventory drones make this reality possible. At this intersection of technology and opportunity, the choice is clear: move with the times or get left behind.