Who should I inventory with? Own employees vs. experts

Whenever you perform an inventory, the question arises of who should perform the physical counting. Is it right to ask your own employees? In most cases, this suddenly seems like a good decision… but is it really? According to the International Standards for the Professional Practice of Internal Auditing, the approach is troublesome from the aspect of a number of principles, including objectivity, independence, and conflict of interest. But let’s take a closer look.

Why exactly do you want your employees to perform the work of inventory?

• It is comfortable for management, as it does not require them to leave their comfort zone and can call upon the people they are familiar with.
• Their experience may provide an advantage, as they are familiar with the company’s products, their characteristics, and the area itself.

However, for the purposes of inventory, these are mostly fictitious advantages.

The purpose of the inventory is to gain exact, true data on your stocks, including the associated shortages, surpluses, thefts, and scrap.

It may occur that these problems, identified during the stocktaking process, were caused by your own employees. This means it is not expedient to have an employee perform the inventory who works with the stocks on an everyday basis and who is liable for those, or with an employee who, despite being the company’s employee, has not conducted an inventory for at least 1 year (e.g. office worker), because they will be unable to provide effective support. Using own employees to identify intentional shortages is, at very least, problematic, like in the classic movie Sergeant Bilko, where even a mirror inventory had to be used.

However, an independent expert who works with inventory will provide an objective picture, as he has no personal interests vested in stocktaking. No questions pop into his mind because of his “background” knowledge, like

• “Shouldn’t there be more of these here”? or “Oh yes, there are a couple in the warehouse, so I’ll just add +6” or “But we have a showpiece too, so that’s +1” (These are familiar, right? The amount is added, but nobody checks…),
• “This shouldn’t be here”, “No, it shouldn’t, let me take it” -> a basic rule in inventory is that goods cannot be moved during the inventory (unless so decreed by the inventory instructions).

Due to these thoughts they may have, own employees will unintentionally influence stocktaking, writing numbers from memory or moving items to their “correct” locations, causing them to be recorded twice or not at all. Not to mention the fact that someone who works with the items in question day in and day out is a lot less motivated and enthusiastic to move them around again, put them in order, and count them. Own employees consider the inventory a necessary evil, and their enthusiasm is in line with their feelings.

No matter what work you do, if you are not motivated, the results of the work will reflect the lack of motivation. In an inventory, the stacks are high.

We would also refute the importance of experience: for the purposes of an inventory, having an exact knowledge of the items does not constitute an advantage. You don’t have to know exactly what is in each box or glass and what each product is for. However, the (active) experience in inventory of the person performing the is a great advantage. Own employees are generally required to perform inventories one a year, which is seldom enough for them to be unable to remember every aspect. Nevertheless, we often hear the phrase, “I’ve done this before, I know how to do it, you don’t have to tell me!” However, in most cases the experience is not quite as fresh as the workers would believe. This may lead to unpleasant confrontations, miscalculations, and incorrect records.

It is true that there may be products among the stock where the unit registered in the inventory management software and found on the shelf cannot be unequivocally determined.

As this information is generally used by own employees, their presence can have a positive effect, though this is negligible compared to the exact inventory of the results. Although the freedom of choice is still given, there are numerous advantages to involving an objective third party in inventories.

By: Eszter Puskás & András Takács