Year-End Inventory Checklist for Makers (2026) — 9 Steps to Start Strong
A checklist covering the steps you need to take to get your manufacturing business organized and in control for 2026.
Now that you are almost through the busy holiday season (phew!), it’s time to start to reflect on the year that has been.
To give you a focal point on this reflection process from an inventory management perspective, we’ve put together this complete Ultimate End-Of-Year Inventory and Operations Checklist.
Our checklist covers all aspects of your business as inventory is much more than just keeping count of your stock levels: we cover financials, customer service, marketing to production, workshop maintenance, and operations.
Working through our inventory checklist will help you identify any areas that need improvement or where extra efforts should be allocated for the upcoming year.
Ready to get organized and on-track for 2026? Great - let’s get started!
Prepare and Better Organize your Warehouse Space
Put some thought into ways you can change or improve your warehouse / workshop space to maximize efficiency and reduce bottlenecks - having a well organized, clean and orderly space to work can pay dividends in the long term.
☑️ If you haven’t got one already, create a floor plan that clearly demarkates the different areas you have for the different steps of your manufacturing, packing and shipping phases.
☑️ Make sure your raw materials are stored correctly and safely, with clear labels so any staff member can find what they need quickly.
☑️ Use your historical sales data to identify high selling SKUs, and make sure these products are stored in the easiest-to-reach locations for your packing staff.
☑️ Take a look at your pack stations and reorganize where necessary so everyone has a dedicated, well-arranged space to work and complete the pick-and-pack process. If you hire seasonal staff, make sure they also have adequate space to work efficiently.
☑️ Create a designated space for tackling “problem orders” so your team quickly continue to move through your non-problematic orders without getting distracted on ones that need more time to complete.
Document your Production Processes
It’s also a great time to make sure your key processes and workflows aren’t trapped in the heads of a few key members of staff.
☑️ Make sure you have SOPs (Standard Operating Procedures) that cover the steps required to produce and ship your products. Set up a process so everyone has read the SOPs relevant to their role — and can feed their thoughts and experience back into the documentation as needed.
☑️ Also document any training or onboarding processes you follow with new members of your team.
☑️ Make sure all your BoMs (Bill of Materials) are documented — you need a clear record of the quantities and types of raw materials required for each batch you produce.
☑️ Consider implementing manufacturing travelers to document and track each production run, ensuring consistency and quality control as you scale in the new year.
Track your Inventory
As a manufacturing business, it’s essential to be on top of one of your biggest sources of expenditure: your raw materials and finished goods.
☑️ Make sure you have a system for checking in raw materials the moment they arrive from suppliers, so everyone knows what’s available in real time. That process should cover how to unpack and store goods, who handles the task, and how it gets updated in your inventory management system. If you work with materials that require lot tracking or batch tracking, make sure those numbers are recorded and tracked all the way through production.
☑️ Make sure you also have a process to check-out raw materials when a batch is produced, so used stock is removed from your current counts. Keep a close eye on your Work-in-Progress (WIP) inventory levels — you don’t want cash tied up in partially finished products over the holiday break.
☑️ Analyse your material usage to predict future requirements for next year, and establish reorder points for key materials so that orders arrive before you run out of stock.
☑️ Learn about the differences between periodic or perpetual inventory systems to determine which method is best for your particular manufacturing situation.
☑️ Create a plan and schedule for your stock counts, and decide if you will undertake complete end of year stock counts or regular cycle counts through the year.
☑️ Take a deep dive into your inventory shrinkage situation - how much stock have you lost to damage, or to unknown causes. Draw some conclusions from this data and use this to inform your SOPs and staff training going forward.
See also: Complete Guide to Raw Material Inventory Management
Analyze your Financial Picture
Reviewing your financial data will also help you make better decisions going into the new year. This will help you identify areas where you can save money in the upcoming year, and make your business more profitable overall.
☑️ Examine your P&L statement, balance sheet, and cash flow statements to see where you stand financially.
☑️ Identify any areas that you can cut or minimize costs, either with your overhead (indirect) costs or your direct costs of production. This may mean cancelling subscriptions or finding better sources of raw materials.
☑️ Calculate how much inventory you have on hand - if you feel you have too much, make a plan to reduce this via selling at a discount.
☑️ Confirm you’re using a consistent inventory valuation method year-over-year. GAAP and IRS rules both require consistency — whether you use FIFO, weighted average cost, or specific identification, switching methods without proper disclosure can create tax and accounting problems. Craftybase uses weighted average costing by default, which is the most practical method for makers working with variable batch sizes.
Forecast your Sales For Future Success
You need a solid handle on the past to anticipate what’s coming. Your data from prior years is the clearest signal for which SKUs are popular and when — and tracking trends through the current year gives you a firmer read on your production timing: when to make products so they’re ready before demand peaks. All of this feeds into getting your inventory levels right for the upcoming year and avoiding the overstock-or-stockout trap.
☑️ Spend some time gathering your sales numbers and figure out which months were your biggest ones — and why. If you use software to automate this step, make sure you’ve actually read and digested the relevant reports, not just run them.
☑️ Take a look at the same time at any external factors that may influence your inventory decisions for the next year. Consider anything from weather patterns to consumer trends as they can have a more significant impact on your sales than you may at first glance think.
☑️ Plan out an estimated production schedule using your forecasted stock numbers, with room for growth built in. Track your progress with key production planning KPIs to stay on top of your manufacturing goals.
Free Download: Production planning template for Excel and Numbers
Look at your Customer Service Situation
Good customer service matters for every business — but it’s especially important when inventory is involved. Make sure your customer service processes are current and easy to follow, so your team can consistently deliver a great experience.
☑️ Create SOPs for the common scenarios and questions you get from customers. Having consistent ways to handle returns, exchanges, and faulty items means your team delivers quality interactions every time — not just when someone knows the right answer.
☑️ Make sure your policies are clearly documented and visible on all your sales channels.
☑️ Review customer service inquiries and feedback regularly — they’re a surprisingly useful signal for predicting demand. Patterns in what customers ask about (out-of-stock items, long lead times, product confusion) can shape your inventory decisions as much as your sales data can.
☑️ Take a look at customer service requests of the past year and consider how any changes you introduce can improve both your customer experiences and stock management processes in the coming year.
Stay on Top of New Regulations
When you’re heads-down running a busy manufacturing business, it’s easy for new regulations to slip by unnoticed. Year-end is the right time to catch up and confirm you’re compliant heading into 2026.
☑️ Take the time to check for any new laws or regulations that may have been passed in your state or country and take note of any changes that need to be made from a shipping, warehousing and packaging perspective.
☑️ Check for any new requirements related to labeling or safety standards for your products. It’s the kind of thing that’s easy to miss mid-year — and a year-end review is a good catch-all to make sure nothing has slipped through.
☑️ Familiarize yourself with GMP practices and see if you can improve your manufacturing processes in line with recommendations and guidance.
☑️ Confirm your inventory tracking obligations for the 2025 tax year. The IRS requires makers who manufacture from raw materials to track material usage and COGS, regardless of revenue — Publication 334 and IRC Section 471 both apply to product-based businesses. Most small makers qualify for the simplified accounting method (average annual gross receipts under $31 million), but you still need accurate year-end inventory values and a consistent cost-flow method (FIFO, weighted average, or specific identification). Our guide to IRS inventory requirements for small business explains what you need to have on record.
Review your Pricing
The end of the year is also a good time to review your pricing and check it still holds up against your growth targets.
☑️ Review your COGM and COGS and check they still reflect your actual costs — current raw material prices, labor rates, and any other factors that have shifted over the year.
☑️ Calculate your profit margins per product and check they still stack up against your growth targets. Start by tallying your unit cost to produce each product and compare it to your average sale price — discounts included.
☑️ Determine if you should raise prices by a percentage across the board or individually, and make a plan to do so across your sales channels ready for Jan 1.
See also: How to increase your manufacturing profit margin: 6 Easy Steps
Review your Technology Situation
Finally, it’s important to evaluate if you have the right technology in place to support your inventory operations for the upcoming year.
☑️ Take a good hard look at that Excel spreadsheet / paper-based system that handles one or more of your operations processes and see if you can find a better solution (especially if you are planning on growth next year 😉). Example: Spade to Fork transitioned from a complex network of custom spreadsheets to Craftybase to prevent costly formula errors as they expanded into brick-and-mortar retail—describing it as their “operational backbone.”
☑️ Check that all team members have adequate access to the systems and data they need to perform their job to the best of their ability
☑️ Make sure you have a clear onboarding process for new team members covering all the technology you use
Read more: How to choose software to optimize your manufacturing process
Frequently Asked Questions
What should I include in a year-end inventory checklist for makers?
A year-end inventory checklist should cover physical stock counts, warehouse organisation, COGS and COGM review, pricing analysis, sales forecasting, customer service process review, regulatory compliance checks, production documentation updates, and technology evaluation. The key is to go beyond just counting stock — your year-end review is a chance to assess every operational area that impacts your inventory and profitability going into the new year.
When should I start my year-end inventory count?
Start your year-end inventory count in late November or early December, before the holiday rush peaks. This gives you a clean baseline going into your busiest sales period. If a full count isn't possible mid-season, schedule a complete physical count for the first week of January — when things quiet down — and record your end-of-year inventory value based on your software data as of 31 December.
How do I calculate my inventory value at year-end?
To calculate your year-end inventory value, multiply the quantity of each item — raw materials and finished goods — by its unit cost, then sum everything up. This Closing Inventory value flows directly into your COGS calculation for tax reporting. Craftybase tracks material costs and quantities continuously, so you can pull an accurate inventory valuation report at any point during the year, not just at year-end.
Do I need to physically count all inventory at year-end?
For tax purposes, the IRS requires accurate inventory records, but a full physical count isn't always mandatory if your inventory management system maintains a reliable perpetual record. A physical count at least once per year is still good practice to catch shrinkage, damage, and data entry errors. Craftybase's perpetual inventory updates with every production run and order, reducing the scope of what needs to be physically verified.
What's the difference between a year-end inventory count and cycle counting?
A year-end inventory count is a complete physical count of all stock taken once annually — typically to satisfy tax and accounting requirements. Cycle counting is an ongoing process where you count a rotating subset of inventory throughout the year. Many makers combine both: cycle counts keep records accurate month-to-month, while the year-end count provides a definitive annual reconciliation. Cycle counting is generally less disruptive to ongoing production.
How can Craftybase help with year-end inventory tasks?
Craftybase automates the most time-consuming parts of year-end: COGS calculations, material usage reports, and profitability analysis are available year-round, not just in December. You can run a Schedule C report, review stock on hand, and pull pricing data for all your products in minutes — which means less time in spreadsheets and more time actually improving your business before the new year starts.
Craftybase - Your Inventory and Manufacturing Software Solution
Inventory and MRP systems can help automate and simplify much of your internal production processes and give you a better understanding of what is happening in your supply chain.
Using a platform like Craftybase Inventory + Manufacturing can help you plan and manage inventory better. It helps to track daily inventory movements and profitability across multiple sales channels, making it easier to forecast future demand and estimate inventory costs accurately.
The software also automates much of your business’ time-consuming processes such as reordering, tracking lot numbers, expiry dates and more. Try Craftybase for free today.
Conclusion
Having a plan for all aspects of your inventory strategy will go a long way toward setting yourself up for maker success in the coming year.
Use this Ultimate Inventory Checklist to review your business situation and make any necessary adjustments to set yourself up for success in 2026! Good luck!
Learn more about how to manage your raw material and product stock as a small manufacturing business with our handy guide here: What is Inventory Management? The Complete Guide
