"Close Enough" inventory counts typically refer to situations where the recorded inventory levels are considered acceptable despite minor discrepancies from the actual physical count. This approach accepts small differences because perfect accuracy seems unrealistic due to time, cost, and other practical limits. While retailers may overlook this issue, it actually carries a high cost. Read on to uncover the hidden cost of the "close enough" approach.

Understanding Inventory Counts

Inventory counts—whether done weekly, monthly, biannually, or annually—are a reset point, the key moment when records should align with reality. It’s also the time to confront the uncomfortable issues of missing stock and process errors. However, when retailers rely on “close enough” practices without aiming to correct them, they miss the chance to improve accuracy and efficiency. Instead of truly setting things straight, they settle for a rough idea of what’s going on, which fails to fully leverage the potential of inventory counts.

Why Businesses Opt for Approximate Counts

There are two main reasons behind this approach. First, many retailers stick to old habits, often without questioning or analyzing their processes, because they believe change isn’t realistic. Since they’ve managed to work around these issues for so long, adjusting their approach feels unnecessary or even impossible. Second, some retailers don’t fully understand how much these discrepancies affect their bottom line, often assuming the cost and effort to fix them would be greater than the impact of accepting small gaps in accuracy.

The True Costs of Inaccurate Inventory

The cost of inaccurate inventory counts runs deep—it’s not just about financial loss; it disrupts operations and, most importantly, impacts the trust and experience customers have with your brand.

Financial Impact

First and foremost is the financial impact, which hits retailers the hardest as they see and feel it directly. Every piece of lost, stolen, or miscounted stock adds up to significant losses that cut into profits.

"Close enough" counts create a heavy financial burden by allowing unnoticed stock losses, leading to missed sales and the need to produce more to cover for expected shrinkage. Additionally, there’s the indirect cost of missed potential sales that could have been captured if inventory were managed more accurately.

Operational Challenges

Beyond financial costs, inaccurate stock management brings significant operational challenges. When stock records are off, you can’t replenish inventory on time, valuable hours are wasted searching for items mistakenly recorded as available, and decision-making becomes difficult due to unreliable data.

Customer Experience

Above all, poor inventory management impacts customer experience and damages brand loyalty. While we may assume only internal teams notice operational issues, customers feel it, too. They see it when an online order turns out to be unavailable, when staff returns from the back room empty-handed, or when popular sizes are missing from shelves—and believe me, they judge your operation. The real risk with disappointed customers is losing them for good, turning a single mishap into a lasting loss—and damaging your reputation along the way.

Best Practices for Accurate Inventory Counts

Contrary to popular belief, retailers don’t have to settle for "close enough" when it comes to inventory accuracy. There are several steps retailers can take to ensure their stock is as accurate as possible at all times.

RFID Solution

RFID technology is a retailer’s best friend, simplifying stock management and ensuring the highest accuracy with minimal effort. With RFID, retailers can easily conduct stocktaking, search for items, validate shipments, and more to ensure everything is in place. Additionally, when issues arise, RFID provides immediate alerts, allowing staff to resolve problems quickly.

Staff Training and Accountability

Educate your staff about company goals, new processes, and provide them with tools to improve stock accuracy. If certain areas tend to cause errors, equip staff with better tools and protocols to handle those situations. Make sure everyone understands the importance of careful inventory management, and consider offering bonuses for stores that improve their stock accuracy.

Embracing Automation

Consider automation wherever possible. If mistakes frequently occur in certain areas of stock handling, look to technology for solutions. For example, if manual count errors are an issue with shipment validation, implement RFID tunnels or gates to ensure fast, accurate scanning. This helps reduce errors and makes life easier for your staff.

Inaccurate inventory counts may seem like a minor issue, but the impact on your bottom line, operations, and customer experience can be significant. By adopting RFID technology, training your staff, and embracing automation, retailers can ensure greater accuracy and efficiency. Taking these steps not only improves inventory management but also strengthens your brand's reputation and customer loyalty in the long run.