Microsoft Dynamics GP and Physical Inventory

Did you know Physical Inventory was your most useful Quality Management tool?

Frances Donnelly, C.Q.P.A., Director of Product Development Horizons International.

Well maybe it is not the most useful but it is certainly a great opportunity to evaluate how well your processes are operating. The purpose of physical inventory is to validate the accuracy of the inventory asset value that you carry from month to month on your financial reports. The degree to which the physical count value matches the book value is an indication of how accurately your people and processes are functioning. Of course because there can be balancing errors, evaluating the accuracy of inventory simply on matching the dollar value is not sufficient.

Instead what we have to do is use Microsoft Dynamics GP to look at the individual reconciling transactions from physical inventory and use our improvement management processes to investigate and determine the root cause of each discrepancy. Then we have to fix them so they can’t happen again. For those organizations with ISO certifications this Improvement Management requirement is increasingly important.

Oftentimes this last set of tasks around physical inventory is abandoned in the face of more immediate needs or simply because we are over the whole process. There is every intention of cleaning up these transactions but without a formal process for documenting, assigning and tracking the investigative activities nothing concrete happens and the same issues affect the inventory accuracy in the following year.

To complete this process, the functionality of Microsoft Dynamics GP tracks assignments, due dates and has reporting and graphing tools, making it easier to manage. Centralized control of documents and events ensures consistent communication and allows everyone on the team to easily monitor progress from the same data.

It doesn’t matter how you manage your post inventory investigations it simply matters that you do. If we can help contact us at

If you would like more ideas on how to best execute Physical Inventory with DynamicsGP download our Tips and Tricks document.