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Inventory Counting

An accurate inventory count is the foundation of everything else in VMX — purchasing decisions, GMROII calculations, order planning projections, and your daily inventory reports all depend on your on-hand quantities being correct.

This guide walks through how to run a count well, from timing to staffing to handling the messiness of a live retail operation.

The Core Principle

The goal is simple: every physical item that comes in should be received into an item number, and every physical item that goes out should be sold from that same item number. When a mismatch happens — an item arrives under one SKU but gets sold under another — the error might seem small in isolation, but these discrepancies compound over time and quietly distort your inventory picture.

Counts are how you find and fix those mismatches.

When to Count

Timing a count matters as much as how you run it. The worst time to count is during your busiest receiving period — when trucks are arriving daily, it's nearly impossible to get a clean snapshot.

Good times to count:

  • Late summer (August–September) — after spring/summer season winds down, before fall buying begins
  • January — post-holiday, before spring inventory starts arriving
  • Any period with minimal inbound receiving and lower customer traffic

Avoid:

  • Peak receiving season — for most garden centers this is April and May, though timing varies by region and industry
  • Immediately before or after a major receiving push
  • Holiday weekends

Staffing a Count

Use people who actually know the products. This sounds obvious, but it makes an enormous difference in accuracy.

Good choices:

  • Buyers who understand product specifications and can distinguish similar items (e.g., a 3-gallon vs. 5-gallon of the same plant)
  • Experienced cashiers who recognize common items by sight
  • Staff who work closely with tagging and receiving

Avoid assigning random staff who aren't familiar with your inventory — they'll misidentify items, skip things they don't recognize, and create more work to clean up than if you'd assigned fewer, more knowledgeable people.

The Section-by-Section Approach

The most reliable counting method is systematic and spatial — you move through defined physical areas, count everything in each area before moving on, and don't skip around.

What works:

  1. Divide your space into clearly defined sections (by department, greenhouse bay, aisle, etc.)
  2. Assign each counter a specific section — they own it start to finish
  3. Count everything in the section, including items that might not be on your list
  4. Note items that appear in multiple locations — consolidate or flag for later
  5. Move on only when the section is complete

What doesn't work: A "scavenger hunt" approach where counters roam looking for specific items. This leads to items being missed, counted twice, or skipped because a counter assumes someone else will get them.

Tip

Combine counting with light housekeeping. When a counter notices scattered items that belong in another section, they can flag them and the consolidation happens as a second pass — rather than interrupting the count.

Low-Tech vs. High-Tech

For a first count or for teams new to the process, start low-tech:

  • Printed spreadsheets on clipboards
  • Manual tally marks — count by fives, write totals, leave room for notes
  • Pencil (not pen) so corrections are easy

The low-tech approach is more forgiving. Counters can add notes, flag unusual items, mark location discrepancies, and make corrections without fighting with technology. Once your team is comfortable with the process and your data is reasonably clean, moving to tablets or barcode scanners adds speed — but it amplifies errors too if the underlying process isn't solid.

Managing Flux During a Count

The hardest part of counting a live retail operation is that inventory keeps moving while you're counting it.

On the receiving side (controllable)

  • Freeze receiving during the count if possible — have trucks hold or stage shipments separately
  • If you can't freeze receiving, keep incoming shipments physically segregated and clearly unmarked until the count is complete, then receive them after

On the sales side (ongoing)

  • Run a sales report for items sold during the count window
  • For high-movement items (fast-moving plants, daily consumables), recount at the end of the day and adjust for what sold
  • The goal isn't a simultaneous snapshot of every item — it's a defensible, reconciled count

The Three-Point Receiving Check

Most inventory errors don't start at the count — they start at receiving. Accurate counts depend on accurate receiving, and accurate receiving depends on having checks in place.

Three verification points, each independent:

  1. The person physically receiving checks quantities against the purchase order as items come off the truck
  2. Accounts payable verifies quantities again when processing the vendor invoice
  3. The person creating tags serves as a third check — if the tag count doesn't match what's in the system, something went wrong upstream

These three people rarely talk directly to each other about a given shipment, which is exactly the point. Independent verification catches discrepancies that would otherwise slip through.

Info

The most common receiving error is an item arriving without proper identification — no tag, wrong tag, or a vendor barcode assigned to the wrong item in your system. When cashiers can't find an item's tag, they guess, and those guesses create exactly the kind of item number mismatches that accumulate into significant inventory distortions.

Types of Inventory Adjustments

After a count, you'll typically find discrepancies. VMX handles these in a few ways:

Miscellaneous quantity adjustments

Simple corrections when your count shows a different quantity than the system. Use these for straightforward discrepancies with no financial complexity — you had 40, system shows 52, adjust to 40.

Disposal records

For items that are damaged, dead, or otherwise removed from inventory without being sold. These need to be recorded so the cost flows correctly — the item came in at cost, so removing it without a record leaves ghost value in your inventory.

Vendor credits and free goods

When a vendor gives you free replacement items or credits for dead product, treat it as an exchange: minus the original quantity at regular price, plus the replacement quantity at $0. The net quantity effect on inventory is zero, but the financial adjustment is recorded correctly.

Adjustments for items received but sold under a different SKU

This is the most common and most damaging type of error. If you received 20 units of Item A but sold them as Item B, you'll show Item A as overstocked and Item B as undersold. The fix is a quantity adjustment on both items — down on A, up on B — to bring the system in line with reality.

After the Count: Using the Data

A completed count feeds directly into your buying decisions:

  • Items with unexpectedly low on-hand counts may need immediate reorders — check against Order Planning
  • Items with higher-than-expected counts suggest you've been over-buying or under-selling — factor this into your next Open to Buy budget
  • Recurring discrepancies in the same department often point to a receiving or tagging process problem, not just a counting problem — investigate upstream

Tip

The Count Progress report in VMX lets you track how far through a count you are in real time, so you can see which sections are done and which still need reconciliation.