RFID Inventory Count: Automating the Count and Its Limits

How the technology works

A tag with a unique identifier is attached to each accounting item. The reader polls the tags within range and passes the data to the accounting system, where it is matched against recorded balances.

The fundamental difference from barcoding is that no direct line of sight to the tag and no item-by-item scanning are needed. The reader captures many items at once, including those in packaging or at a distance.

• a unique identifier on each item
• reading without direct line of sight to the tag
• simultaneous capture of many items
• data transfer to the accounting system
• automatic matching against balances

Where the technology pays off

The biggest return is in warehouses with a large product range and high turnover, where a manual count takes days and requires operations to stop.

The second scenario is accounting for fixed assets spread across offices and departments. Here the value lies less in speed than in being able to quickly find an item and confirm it is present in a specific room.

• warehouses with a large product range
• high inventory turnover
• fixed assets in several locations
• equipment transferred between departments
• property that needs frequent presence checks

What is needed for implementation

Besides the equipment and tags, the accounting data has to be prepared. If the product catalogue in the database is kept carelessly, duplicates and inaccuracies will not disappear after automation — they will simply become more visible.

The second condition is the tagging process. Tagging existing stock is a project in itself, comparable in effort to a regular stock count.

• cleaning up the product catalogue
• tagging existing stock
• integration with the accounting system
• training staff to use the equipment
• a procedure for tagging new receipts

What the technology does not solve

Automation speeds up data collection but does not replace the stock count procedure. The count committee, the order to carry out the count, the count sheets and the final report remain mandatory — only the way actual data is obtained changes.

The second illusion is that tags ensure reliability. A tag confirms that an item is present in the read zone, but not its condition, completeness or fitness for use. Visual checks of significant items remain.

Documentation still applies

The results of an automated count must be documented in the same way as a manual count: count sheets signed by the committee members and the persons with custody of the assets, reconciliation statements and a final report.

A system export on its own is not a stock count document. The procedure for using electronic data as the basis for count sheets should be set out in the company's internal regulations.

The transition period also needs to be considered. While part of the stock is tagged and part is not, the count is carried out using a mixed method, and this is the most vulnerable stage of the project. Data from two sources has to be merged correctly, and count sheets prepared so that the origin of each item is clear. If this stage is not planned, the company ends up with a result that neither the accounting team nor the warehouse trusts. That is why it is better to tie the tagging schedule to a planned stock count rather than run it alongside day-to-day work.

• the order to carry out the stock count
• the committee's composition and participation
• count sheets generated from the reader data
• signatures of the committee and responsible persons
• reconciliation statements for discrepancies
• the final report and decisions on discrepancies

How to assess whether it is worthwhile

What needs to be calculated is not the cost of the equipment but the overall effect: less time spent counting, fewer losses from unrecorded property, less warehouse downtime.

For a company with a small product range, the effect may not pay back the implementation. We recommend starting with an assessment of current losses and labour costs — only these figures provide a basis for the decision.

The organisational side matters too. The technology works reliably only when tagging new receipts is built into the everyday receiving process rather than done in bursts before a count. If some items remain untagged, the automated count gives an incomplete picture, and trust in the result is lost faster than it was built. That is why the tagging procedure and responsibility for it are defined at the implementation stage — together with what to do if a tag on an item is damaged or lost.

Help from Leader Audit

We do not supply equipment, but we help with the accounting side of the project: we clean up the product catalogue, develop the stock count procedure and document forms, and check that the results are recorded correctly.

13 years of practice and more than 220 audits show that problems most often arise not with the hardware but with the paperwork. An automated count without proper documents proves nothing during an inspection.

• cleaning up the accounting data
• developing the stock count procedure
• count sheet and report forms for automated data collection
• checking that results are recorded correctly
• specialists taking part in the stock count