Physical Inventory Key Aspects

Physical inventory is one important activity required for Inventory management. It can be a best practice to reconcile the entire inventory by physical counting. But it is also at times an audit requirement. Some of the impacts if physical inventory is not done, can be

• failure to deliver the goods when you realize only at the time of shipping that  the physical count is less than what is shown as System inventory
• Loss of customer confidence as a result of repeated failures like above
• Excess costs when you purchase more when system inventory shows less
• Your inventory valuation based on system inventory will be wrong