Performing regular inventory counts is a necessary practice to integrate into your regular operations. Accurate counts ensure better reporting, cleaner bookkeeping, and proper management of your inventory.

This process is even more significant if you're operating in a state using Metrc, as performing and reporting inventory counts is a monthly compliance requirement.

We'll walk through four main components which make up the inventory count process:

• Preparation
• Count
• Investigation
• Adjustment

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Preparation

Step 1: Complete entering all inventory transactions into your Treez portal so the system is up to date. This includes submitting any known adjustments at Inventory > Inventory Management > Inventory Adjustment (e.g., inventory pulled for samples, designated waste, etc.) and accepting any outstanding invoices for inventory you have on hand at Inventory > Purchasing > Invoices.

Step 2: "Freeze" your inventory by making sure no updates (including sales) are made after this point to ensure the accuracy of the count.

Step 3: Download and print the Inventory Adjustment page, with the products to be counted, by clicking the menu icon in the top right corner.

• Use the filters above the table if you want to adjust what products are included. You can filter by product category, items matching a search parameter, Active or Out of Stock status, or location of inventory. 
• Adjust what columns are included in the table by clicking the column selector icon directly to the right of the Location filter.  
• Sort the table as desired by clicking the ▼ on a column header to sort the rows in the table either alphabetically, or in ascending or descending order.

Best Practices:

• Select staff and train them on the counting process in advance. You should also designate a supervisor (such as the Inventory Manager or a Team Lead) to manage employees and field issues that arise during the counting process. Employees who are detail-oriented, reliable, and familiar with your inventory are ideal fits for this task.
• When scheduling your counts, be sure to allow enough time for the entire process to be completed for the inventory on hand.
• You may wish to perform Cycle Counts instead of a count of the entire physical inventory. Cycle counting involves counting a different segment of your inventory each day, eventually cycling through all the products. Though this approach requires less downtime for an inventory freeze, your count won't be complete most of the time.
• We recommend using the available filters to distribute different segments of your inventory (categories, brands, products, locations, etc.) among the staff performing the counts. (e.g., Employee 1 counts edibles, Employee 2 counts concentrates, etc.)

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Count

Step 4: Distribute count sheets to assign each staff member with clear segments of inventory to avoid double-counts.

Step 5: Staff counts the inventory, noting their counts on the printed Inventory Adjustment page.

Step 6: All count sheets must be completed and returned to the staff member supervising the count.

Best Practices:

• Pre-counts are a valuable time-saving strategy. Organize stock into easily countable quantities (e.g., boxes of 25), set aside any stock that will not be needed in the time between the pre-count and count, and note the pre-count quantity. When performing the count, these can quickly and easily be added to the count of stock on hand.
• To maximize the integrity of your inventory (after a pre-count or during standard storage), seal the boxes by taping them shut and writing the count, date, and your initials where the two ends of tape overlap — similar to how a tamper-proof seal works. You can keep them sealed individually at the box level like this or move them into a locked/inaccessible location, so they won't be opened.
• If staffing allows double count for optimal accuracy. The two employees should count each product independently, and their results should be compared before adjustments are made.
• If dividing count segments by location, be sure to print the count sheets using the appropriate location filter.

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Investigation

Step 7: Use store records (of returns, defective products, inventory marked out for display or testing, etc.) to investigate any discrepancies between the expected and actual counts.

Step 8: Examine count adjustments and their related reasons to determine if there are any patterns of errors, as these may indicate an issue requiring further action.

Step 9: If you identify sources of repeated error, take action to improve training or workflows in order to prevent the error moving forward.

Best Practices:

• Your Treez portal can help you investigate discrepancies.
• Inventory Control: Check that there aren't any additional units in a location you might have accidentally forgotten about, like your display case, for example.
• Invoices: Check that all invoices for product on-hand have been 'Accepted' status to ensure the inventory from these invoices are being included in your expected count.
• You may encounter expired, defective, or returned items while counting. Establish and communicate to staff a clear process for counting and separating these items. These should be handled according to applicable regulations in your area for disposal or return of cannabis products.
• Keeping information on any inventory adjustments well-documented and in a centralized place (ideally, already entered into Treez prior to the count) will make it much easier to identify the reasons for discrepancies.

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Adjustment

Step 10: Enter the new counts into Treez by following the Inventory Count procedure.

Best Practices:

• Track inventory accuracy metrics and set goals. You may want to share the results of each count or incentivize accuracy as a way to involve the whole team in the count process.
• Though the Treez portal will allow you to make as many adjustments as you need, excessive discrepancies and corrections to Metrc can lead to audits and/or penalties from the state authorities. For this reason, you should aim to require as few inventory adjustments as possible.

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