What is the significance of conducting a Physical Inventory?

Conducting a Physical Inventory is crucial because it verifies the accuracy of inventory records by comparing the physical counts of items on hand with what is recorded in the inventory management system. This process helps identify discrepancies caused by various factors, such as theft, damage, or clerical errors, which can substantially impact logistics operations. By ensuring that the actual physical quantities match the recorded amounts, organizations can maintain proper inventory control, improve accountability, and make informed decisions regarding restocking and resource allocation. This practice is essential for efficiency and accuracy in logistics management within the Navy and prevents costly operational disruptions.