Inventory Reconciliation

Newsletter 05: Inventory Reconciliation 

Welcome back to The Newsletter from efficiency.coffee. 
​
In this edition of The Newsletter we will discuss inventory reconciliation, why it’s important to reconcile inventory, and how to conduct an inventory reconciliation for a coffee roasting company’s green coffee warehouse. 

What is Inventory Reconciliation?
Inventory reconciliation is the process of doing a physical count of all of the green coffee in the company’s warehouse. The company then takes the physical count and compares it against inventory levels in Cropster or whatever other ERP software or system the company is using to manage inventory. 

Conducting an inventory reconciliation is a way for companies to make sure that the amount of coffee that the company thinks it has on hand matches the amount of coffee that the company actually has on hand. 

Why is it Important to Reconcile Inventory?
Inventory mistakes are very common and will happen to every coffee company. Reconciling inventory on a recurring basis helps companies catch mistakes and keep their inventory numbers accurate. 

Common inventory mistakes that can lead to discrepancies between the amounts of coffee in Cropster (or your inventory spreadsheet) and actual coffee on the floor include:

• Data entry mistakes
• A roaster uses the wrong coffee in a blend
• The wrong coffee is sent from the importer warehouse

Catching discrepancies between Cropster (or spreadsheet) inventory and actual inventory is important. Differences between the inventory that a company thinks it has and actually has can lead to:

• Running out of an important coffee
• Accounting mistakes 
• Delays in catching mistakes made by other companies in the supply chain
• Confusion on the roast floor

How to Conduct an Inventory Reconciliation? 
Conducting an inventory reconciliation of green coffee stored at a roasting facility is simple. The inventory manager simply needs to complete a physical count of every bag of coffee that the company has in the warehouse. Then, the inventory manager compares the physical count with the amount of each coffee that is shown at the roastery warehouse in Cropster or whatever other system the company is using. Finally, the inventory manager must investigate any differences between expected inventory and actual inventory, and then update the numbers in Cropster to match the true count. 

Inventory Reconciliation Summary
Inventory Reconciliation is an important and simple job for green coffee inventory managers. 
As a starting point, coffee roasters should conduct inventory reconciliation on a monthly basis. If a roaster is finding many mistakes, they may want to reconcile inventory more frequently. 
Completing inventory reconciliation will keep a coffee roasting company’s numbers accurate and will help them quickly catch mistakes when they do happen. 
The Newsletter from efficiency.coffee will be back in March with a discussion of why it’s important to know the green coffee storage capacity of the roastery’s warehouse and how you can use that information to run an efficient coffee supply chain. 

efficiency.coffee will be at SCA Expo 2024
I am very excited to be giving a lecture “Inventory Management Fundamentals for Green Coffee Buyers” at the Specialty Coffee Association Expo in Chicago in April 2024. Hope to see you in Chicago! 

Thanks for reading!
Thank you for reading The Newsletter  from efficiency.coffee. Please share these resources with anyone who you think will benefit from it. If you have any feedback about this edition of The Newsletter, you know someone that I should interview, or you’d like to suggest a topic for a future edition, please email me at [email protected]. 

In addition to being a resource hub for green coffee buyers, efficiency.coffee is a consulting and freelance green coffee buying business. You can hire me to help you build or re-organize a green coffee purchasing program or as a part-time, freelance green buyer! Reach out to [email protected] to inquire about working together