Perpetual count: a count plan for the whole financial year

In a perpetual count the warehouse never stands still, but the count does not run by itself either. Without a plan it is only occasional recounting; with a plan it becomes a method that captures every item during the financial year and evidences every count. The count plan is the heart of it: it sets out what is counted when and by whom. This article shows how to build it, how many count days you need to allow for and what has to be documented. Whether the method is acceptable for your accounts and what evidence it needs is something to clear beforehand with your auditor and head office.

Prerequisites in the warehouse

• Unambiguous bin locations that agree on the rack and in the system.
• Prompt, bin-exact posting of all movements.
• A stock extract that can be taken for a single zone at a fixed time.
• Written count instructions that apply to every individual count day.

If one of these conditions is missing, start with a full count and build up the prerequisites first.

Planning zones and counting rhythm

First you divide the warehouse into count zones and the items by importance. Valuable or fast-moving items are counted more often, slow movers less often. A fictional example with 6,000 items:

• Group A, 600 items: four times a year, so 2,400 counts.
• Group B, 1,800 items: twice a year, so 3,600 counts.
• Group C, 3,600 items: once a year, so 3,600 counts.

Together that is 9,600 item counts a year. At 40 positions per team hour this gives 9,600 ÷ 40 = 240 team hours. With a reserve of 20 per cent for recounts and clearing it is 288 hours, which corresponds to 36 team days of eight hours. With one team that is 36 count days a year, with two teams 18, which on 48 count weeks means one on average every 2.7 weeks. This is a fraction of the effort of a full count, spread over many small assignments. The rates for the groups are freely chosen.

Structure of the count plan

The plan is a calendar with clear columns: week, count zone, item group, count team, start with time, person responsible. It is approved before the start of the financial year, and changes are made in writing with a date. Missed dates are not deleted but made up with a new date.

The order of the zones in the calendar does not follow the geography of the warehouse but the risk: zones with high value, high turnover or known problems come up earlier and more often. Also note in the plan which zones recently showed conspicuous differences, because an extra count outside the rhythm is worthwhile there.

On the individual count day the same procedure applies as for any count. The stock extract of the zone is taken at the start time and frozen, the team counts blind, and movements in the zone rest for the duration of the count or are recorded separately. If differences arise, a recount and clearing follow under the tiered model before anything is posted.

What has to be documented

• The count plan in its approved version, with all changes.
• For each count day: count zone, date, time, team, stock extract, count sheet, difference list and approval.
• Proof of coverage: an overview of which item was counted when.
• Postponed or cancelled dates with the reason and the make-up date.

It is usually expected that every item is physically counted at least once during the financial year. The proof of coverage shows whether that has been achieved: an item without a count stands out in the overview at once and is made up before year end. What requirements your auditor sets for scope and evidence is something to clarify in advance.

In short

The perpetual count spreads the effort and keeps the book stock reliable all year, provided the count plan is kept in order. AuditMaster prepares count plans that spread zones and item groups across the year, carries out the individual count days and documents them without gaps.