Regular stock taking afford businesses an accurate accounting of their stock levels, highlight major areas of weakness and loss – such as theft, damage and obsolescence – and provide the data that inventory managers need in order to forecast, plan, and purchase to best meet customer demand.
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. Make sure to schedule your stock taking during slow sales cycles, and outside of regular business hours.
So is organization
Appoint leaders with strong organizational skills to head up the stock taking, and task them with preparing all the necessary equipment required, such as portable bar code scanners, stock sheets, clipboards, pens and calculators.
Organize staff into teams and ensure that each team is assigned a supervisor. Everyone should be clearly tasked and understand exactly which stock they will be required to count.
Avoid double counts by marking goods
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 teams 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.
Value your stock correctly
Be sure to price your stock according to the most current cost prices and recommended retail prices (RRP). For example, if you purchased certain stock a year ago at $500 USD per unit but the current cost price has dropped to $350 USD per unit, and then your 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 you have an accurate count of all your stock levels, it is time to gather the most essential data that will allow you to pinpoint areas of loss as a result of bad business practice, theft and obsolescence.
Determine which stock has the highest turnover rate and plan your purchase orders accordingly. This way you can ensure that you won’t run into a stock out, should demand continue to surge for fast-moving inventory.
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 vulnerable stock. Such measures could include having pallets wrapped with a pallet wrapper prior to shipment, as well as implementing enhanced security checks and monitoring for goods in storage.
Assess your stock taking needs
Regular stock takes are extremely beneficial in helping businesses streamline their inventory management and thereby optimize productivity and boost profitability. It may also be highly advantageous to your business to ensure that all stock can be accurately counted, tracked and traced throughout every stage of the inventory process by investing in a good inventory management software system. Unleashed offers real-time perpetual inventory functionality, where inventory is updated on a continuous basis, making regular stock takes a thing of the past.
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.