Let’s say you run a garden centre, selling plants and gardening equipment. You’re stock taking and you’ve noticed that something’s wrong: the number of garden gnomes you have on the shelf doesn’t match the number of garden gnomes that you’ve recorded in your inventory stock count. You’re surprised – how could this have happened? How did you end up with a stock discrepancy?
A stock discrepancy is when the actual amount of stock you hold doesn’t match up with the recorded amount of inventory stock. These discrepancies usually become apparent during stock taking. There are many reasons this might happen:
- You or your employees might make a mistake when recording the inventory stock and miscount the amount of stock you’ve received
- You might have incorrectly recorded how much stock you received from someone else or misplaced the stock you have received
- You might have accidentally recorded stock you shouldn’t have, such as damaged stock, returned stock, or stock you’ve sold to someone else, in your inventory stock count
- Stock on the shop floor might have been stolen by a shoplifter or employer
- You might have incorrectly labelled some of your stock, so it was accidentally counted as other stock during stock taking
It’s important to prevent a stock discrepancy from occurring, as it can have a number of bad flow-on effects. Having less stock in your inventory than you have recorded can lead to a loss of sales and a loss of customer confidence; having more stock than you’ve recorded can lead to a build-up of stock you can’t sell.
How do I prevent a stock discrepancy?
Start by investigating the current discrepancy and seeing if you can reconcile or explain it. First get another staff member to redo your stock taking for that item. If the recount is the same, double check that your actual stock and your recorded inventory stock have been counted using the same units of measure (in dozens, for example, or hundreds). Also, double check that you haven’t misplaced any paperwork or that you haven’t accidentally counted material you’ve already sold or don’t own yet.
If you can’t explain the discrepancy, accept it and then put procedures in place to prevent it from happening again. A stock discrepancy can typically be explained by you or one of your employees making a mistake; the following tips can be effective safeguards against those kinds of mistakes.
- Use inventory management software. Software like Unleashed has a stock take variance report to show you exactly what you’re missing and how big the discrepancy is.
- Keep your warehouse and stocktake processes simple. The simpler the better, especially if the processes are going to be repeated regularly during the workday
- Label your stock correctly and don’t rush the labelling either. This might damage the labels and make your stock hard to identify
- Mark your stock locations clearly both on the floor and in your inventory software. This is so you don’t lose any stock unnecessarily
- Organise your stock by location in your inventory software so you don’t have to reorganise your records every time you want to move your stock or record a new type of stock
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.