A master guide to efficient stock taking
Regular stock takes are extremely beneficial in helping streamline inventory management, optimise productivity and boost profitability. It is advantageous to the business to ensure all stock can be accurately counted, tracked and traced throughout every stage of the inventory process by giving an accurate accounting of stock levels, highlight major areas of weakness and loss – such as stock outs, slow stock turn items, theft, damage and dead stock items. Stock takes will also provide the data that the stock manager needs in order to forecast, plan, and purchase to best meet customer demand.
It is recommended to schedule ‘whole of inventory’ stocktakes as regularly as each business type requires for best practice each year as well as scheduling monthly cycle counts from the Vend (or any other) stock inventory management system.
Conducting a regular stocktake will ensure you see benefits which:
- Provide accurate reporting which ensures accounting is up to date and the business is always aware of profit margin
- Identify slow moving and overstocked products so the business can act accordingly with special sales offers. Know that what the business is spending money on is profitable & what stock the retail environment (whether it’s bricks and mortar or e-commerce stores) actually needs
- Reduce back orders – stocktaking empowers business owners to see what moves quickly and reorder in a timely manner so as not to incur stock outs which reflect badly on a ‘customer first’ approach and affects the bottom line with increased courier costs etc
- Highlight poor practices in the operation or possible cases of theft before things might get out of control
Smart tips for stock taking
Timing is everything…
The best time to conduct a stock take is when it will cause the least amount of disruption to regular business operations whilst ensuring stock ordering and purchase timeframes are optimised for customers. It is recommended to schedule your stock taking during slow sales cycles, and outside of regular business hours.
So is organization
Appoint a stock manager with strong organizational skills to head up the stock taking, and task them with preparing all the necessary equipment required. Organize staff to work with the stock manager. Everyone should be clearly tasked and understand exactly which stock they will be required to count with the stock manager inputting the data into Vend or similar.
Avoid double counts by marking goods
If there is a large quantity of stock, in order to avoid double counts have staff mark each item counted so that they know what has and hasn’t been accounted for. Also, designate an easy to follow procedure for the counting – this could be from top shelf to bottom shelf and from left to right, for example
Never trust a label – open, count and record everything
When conducting stock taking it never pays to try speed the process along by guesstimating quantities, or trusting the quantities indicated on labels to be correct. Make it explicitly clear to the stock manager that every single piece of inventory needs to be hand counted, marked and recorded.
This means that if there is an unopened box that indicates 10 units are contained inside, do not mark it down and move on – open the box, count every unit, record it and then proceed on to the next box.
Ensure all data is up to date before stock taking
It is extremely important to ensure that only up-to-date data is used. Make sure to pinpoint and omit inventory that has already been invoiced to customers, but has not yet shipped – as well as stock received, but not yet recorded in the inventory management software system. All stock and price lists need to be the most up-to-date lists available.
Be sure to price stock according to the most current cost prices and recommended retail prices (RRP). For example, if stock was purchased a year ago at $50 per unit but the current cost price has dropped to $35 per unit, and then stock lists should reflect the lower of the two prices. The same applies for retail price points. (The accounting principle of lower of cost or market, or ‘LCM’, applies).
Gather the essential data
Once there is an accurate count of all stock levels, it is time to gather the most essential data that will help the business:
- Pinpoint areas of loss as a result of bad business practice, theft and obsolescence
- Determine which stock has the highest turnover rate and plan purchase orders accordingly. This ensures that the business won’t run into a stock out, should demand continue to surge for fast-moving inventory
- Check the physical count against accounting records. Re-check discrepancies and make a note about variances to follow up where necessary
Act to improve areas of weakness and loss
Be sure to identify stock with a sluggish turnover ratio, as well as items particularly vulnerable to damage, theft and tampering. Draw up a plan to sell that stock off and then put counter measures in place to prevent pilfering and damage taking place on dead stock. This should include measures including enhanced security and monitoring for goods in storage.
Make sure the data for the stocktake is valid
- Receive any outstanding purchase orders, inter-store transfers, returns etc
- Decide how the business will handle damaged stock
- Finalise the stocktake and investigate and note any inconsistencies
- Update the inventory records in the accounting package including deleting dead stock off Vend (or similar)
- When completed, review the business stocktaking procedures and note any suggestions to further streamline actions and improve the processes for the next count
Before you begin – Get the right tools for the stocktake
- Stock sheets – Don’t include the current number of inventory on hand. If inventory is barcoded, make sure barcodes are written down clearly
- Write-off sheets – Make sure there is a check of the condition of the inventory as its’ counted
- Pens – Everyone should use different colours. The audit trail can be easily followed if the first counter uses a blue pen, second counter uses a red pen, and the sheets are submitted to the stocktake manager who uses a purple pen
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