MJ Platform recently spoke to cannabis industry veteran and compliance expert Tom McLaughlin to serve up streamlining measures for your regular inventory counts. Inventory both quarterly and monthly are tedious but are hugely important. Compliance and accuracy are at the forefront now more than ever, so it’s obscenely critical to nail an inventory count. While Tom’s tips come from his extensive dispensary background with multiple operators, they do translate to production facilities as well. Tom has managed to solidify his team inventory counts down to about an hour and a half through tried-and-true methods and is here to deliver some key insights with MJ Platform. Read on to save yourself time and labor while keeping in compliance.
- Say Goodbye to Cardboard Boxes
Keeping products in cardboard boxes, even in backstock, only adds to the counting woes and hampers accountability. Instead, opt for clear plastic bins for storage. Using clear bins allows for better visibility of products, eliminating confusion and minimizing mistakes. Standardized bin sizes promote consistency in storage. Unlike cardboard boxes, which come in various sizes and capacities, clear bins ensure uniformity, making your whole inventory easier to see at a glance. These can be affordable through your local dollar store and still manage to hold up over general wear and tear.
Pro tip: You’ll likely want 2-3 varieties of clear bins as sizes of product also vary. Ounce zips won’t stack the same way pre-roll tubes will, so be prepared to have a small, medium, and large standard sized bin.
- Embrace the Power of Small Bins
Breaking up full inventory into smaller bite-sized bins that are easy to count, store, and maintain makes day-to-day operations easier on your team. Yes, you might be able to fit 362 eighths into a single cardboard box, but that means counting all 362 every single day (as we’ll discuss in tip #6). However, dividing those 362 eighths into eight smaller bins will take up roughly the same space as the cardboard box. Remember, this is just an example. Your bin sizes and capacities may vary, but the space required won’t change significantly.
- Label Everything for Clarity
This is just good life advice but works wonders in these instances when organizing inventory. It’s best to create a card that goes on the outside of the plastic bins that includes:
- Cultivator/Producer
- Strain/Product name
- Size (1g, 3.5g, 10mg, 91.2%, etc., depending on the product)
- Track and Trace number, such as the METRC tag (usually the last 5 digits)
- Three to five spaces for counting, with ample room for team members to initial (promoting accountability)
- A space indicating “Bin # ___ of ___”
This last part is crucial. Using our earlier example of 362 eighths, you would have seven bins with 50 each and one bin with 12. Bin 1 should hold the 12, while Bins 2-8 should each contain 50.
Bonus benefit: By setting an alert to order more when you reach Bin 7 of 8, you gain better control over purchasing. This, paired with MJ Platform’s advanced reporting, can keep your purchasing system as precise as possible.
- Secure Your Backstock
Once you’ve received and organized your products into the clear bins, it’s time to seal your backstock. This keeps your product rotation in line with FIFO (first in, first out) while also securing the bins to prevent them from spilling product out. Common packaging tape is a practical option, but colored packaging tape works best as it stands out. It’ll be clear which boxes have been counted and sealed and which ones are active or next to be used. Referring back to our previous example with 362 eighths, Bins 2-8 should be sealed, while Bin 1 remains unsealed.
The labels on the bins will display the respective counts, with the initials of the person who conducted the count in case of any discrepancies. Once you unseal a bin, use the additional count spaces provided on the label to update the count as products are removed and sold.
Remember, only authorized team members should have access to open bins.
- Align Your Vault and FOH Organization
Having an organized vault is essential for a speedy inventory count. Following the notion of staying ready so you don’t have to get ready, certain regular steps in your vault keep you ready for inventory counts. Here are some good practice guidelines for regular vault maintenance:
- Organize products by category (I.e., flower on one wall, edibles on another and arrange them alphabetically by cultivator/producer and then by strain/product name
- Within each category, consider organizing by size (e.g., 1g, 3.5g, 7g) from smallest to largest
- Take expiration dates into account, practicing the FIFO method to ensure older products are used first
- Track and Trace numbers may vary even for products with the same name and expiration date- arrange them from lowest to highest. Admittedly, this part of the process requires the most labor, but the results will be well worth the effort
Keep in mind that you’ll need to update the organization almost daily as products come and go, which may involve shifting bins to accommodate new arrivals. The more available space you have, the easier it becomes.
An optimized Front-of-House (FOH) will utilize the opened bin as the pull bin for customer purchases, so inventory dwindles in a clean, clear way. Empty bins should have a dedicated spot to be brought back into the inventory vault.
- Implement Daily Blind Category Counts
Performing blind counts for each category on a daily basis is crucial to reducing discrepancies. Designate a team member responsible for counting an entire category (e.g., flower, concentrates, vapes) without prior knowledge of the quantities. Compare these counts to both your POS Back Office report and your state-mandated tracking program, such as METRC or BioTrack. If your team is utilizing the bin system, this team member will be able to view at a glance sealed bins of product for faster counts.
In our example of those 362 eighths in inventory, the counter only needs to count 12 individual products instead of 362. The remaining count involves 7 bins with 50 each, totaling 350. Any discrepancies discovered can be promptly addressed, given that you’ll be within a day or two of the occurrences.
- Control Incoming Product the Week of the Quarterly Count
Reducing the number of products in your store translates to fewer items to count. While business operations must continue, consider minimizing the size of deliveries during the week of the quarterly count. If you do receive large deliveries, aim to have them arrive on the day of the count. Typically, large deliveries are placed on shelves for sale the following day. By scheduling them to arrive on the count day, the order should reflect the exact number you received, as it hasn’t been sold yet. This allows you to rely on your initial count upon its arrival.
- Ensure Adequate Staffing
Counting works best when performed by pairs of individuals, with one person counting and the other confirming. That’s why it’s common outside of cannabis to see double or even triple counts during regular retail inventory counts. Within dispensaries, with practice you become more proficient in counting and will develop a better understanding of the staffing levels needed. You may also notice some team members with fast accuracy in counting that you will want to rely on for each inventory count. With each process, be sure to note who is performing well and who may need more support to get the job done. From there, setting labor aside will be a breeze for fast, accurate inventory counts.
Some states may require a third-party presence without any bias. In such cases, you need to have a team member available to explain the organization process, enabling them to accurately and swiftly conduct the count, as well as maintain organization after they finish.
- Incentivize Your Team
Inventory can be daunting for your team, especially if your team has to come in during odd hours to count. Here’s where you need to keep them excited and motivated to run a smooth and accurate inventory.
Reach out to your vendors and let them know you’re doing an inventory count and ask if they have swag items or perhaps extra product samples to share for your staff. Giving your staff the promise of a swag bag or a bonus sample product bag at the end of their shift is a huge motivator. The notion of something fun to take home at the end of an inventory shift can also garner more volunteers to come in for these counts.
This opportunity can be doubled down as well- not only are you helping motivate your team but also building a brand relationship between the brand and your operation. It brings positive brand affinity to your whole team which is gold to cannabis brands.
- Celebrate Your Achievement
Inventory is a huge hurdle, but once you get through it it’s done! After your team has completed inventory, be sure to celebrate the teams responsible. Simple things like sending out a company email calling out everyone who individually contributed is a great way to drive congratulatory messages to your squad.
Thanks again to Tom McLaughlin for his key insights into a killer inventory count. These tips helped him standardize a 90-minute inventory count for the retail locations he’s overseen, which is a huge accomplishment.
For more on how to expedite your inventory count while remaining compliant, check out our new feature that reconcilies inventory discrepancies between MJ Platform and METRC:
