Conducting Inventory

Regardless of the size of your salon you will have to conduct an inventory count. There are many ways to go about conducting a physical count, some simple, some not so simple, depending on the size of the inventory to be counted.

There are three basic models defining inventory methods; Just in Time (JIT) Inventory, Vendor Managed Inventory (VMI) and Customer Managed Inventory (CMI). Each model attempts to minimize on-hand inventory and increase inventory turn over. Additionally, there are two basic methods of accounting for inventory, FIFO and LIFO. These are really just inventory accounting methods and they do not necessarily have anything to do with the physical count or how inventory is handled within your salon.

There are two primary areas that you will focus your inventory counts on, supply inventory and retail product inventory. There is one underlying reason for counting these areas; to make sure that you have the products and materials to accommodate customer requests for services and retail purchases. Secondarily, the count is to also make sure that you are not overloaded with products or supplies that you cannot sell.

A physical count will be required once a year to satisfy your accountant’s need to reconcile asset accounts and losses. However, I recommend that you undertake at least a partial inventory on a more frequent basis. Doing this will help minimize waste and identify deficiencies in your inventory tracking system as you reconcile physical counts to software projected inventory levels.

On the previous page is an example of an inventory tracking and order form. It really doesn’t have to be done on a form but every time a product is sold a record of the sale should be made somewhere. Write it on a sales receipt and collect them in the cash register, at the end of the week count it up and write the totals on a sheet of paper or a form and use that list to place our order to the supply house.

One salon I worked in put all the money for retail sales in an envelope, wrote down what was sold on the back, including who sold it, and then used that information at the end of the month to place their retail order with the distributor and to pay commissions. Right out of the envelope. So you see the system doesn’t have to be complicated, you just need to be consistent in its application

Once products are sold and a record made you can compare what your inventory level should be to what it actually is. There are a lot of different ways to get at this number but the one thing that you cannot neglect is doing a physical count. Here’s what you’ll need:

·          Several People to Count

·          Pencils with Erasers

·          Inventory Count Sheets

·          Tags for Completed Zones

Steps To Count Inventory

• Replenish merchandise on the shelves from products in the stockroom. Try to clear as much inventory from the stockroom as possible. Be sure all merchandise is either on the shelf or in the stockroom.
   
• Meet with staff to explain the inventory counting process.
   
• Assign each employee a location and provide inventory count sheets detailing the inventory with item name, size, and price.
   
• Those conducting the inventory should count each item on their sheet and record the exact quantities.
   
• When the physical inventory count is completed, compare the physical count to the inventory record. Discrepancies should be further investigated and resolved. A recount may be required by a different counting team for any discrepancies.

At the end of the inventory process, adjust the inventory record for each item to reflect the quantity and value of the inventory actually on hand.

Tips:

Complete a full zoning replenishment or straightening of the store's retail and supply inventories so all products are neat and orderly for easy counting. 

To conduct the physical inventory count as quickly as possible, schedule a time when the salon is closed and inventory levels are down. i.e. if you receive supplies on Tuesday count your inventory on Sunday or Monday.

The salon manager should spot check several of the count sheets to verify accuracy in counting by employees.

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Dallas, Texas 75248
phone: 469-441-8771