Taking stock of your inventory: 10 tips

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Stocktaking is an important process that allows businesses to reconcile physical stock on hand against their records. Whether your business is a large operation running a barcode system or a small family enterprise that keeps paper records, it is important to complete a stocktake at least annually before the end of the financial year (although some firms find more frequent stocktakes useful). An effective stocktake allows you to detect theft and spoilage, confirm each recorded item exists and that it is stored where it belongs, fix abnormalities, and give you confidence that your inventory management system is giving you accurate information. Below are 10 tips for a successful stocktake.

1. Organise first

Plan your stocktake in advance by identifying early on when is a suitable, non-disruptive time to do it. Decide whether the stocktake is best done after hours, or whether a full day will be needed as you will need to decide whether the business has to close for any period of time for the stocktake. Also, work out how many staff will be required.

2. Have the right tools

Depending on how you run your stock, different tools will be needed. However, some common items you will require include calculators, handheld scanners, pens (different colours are useful) stock sheets, and write off sheets.

3. Communicate with staff

Make sure your staff know what they need to do, how to do it, and in what order. It is critical that someone who has done a stocktake before is involved to manage staff that have not. Impress on staff the importance of clarifying instructions if they are unsure: since it is a repetitive process, one simple mistake can be frustratingly repeated over and over.

4. Be methodical

Before beginning the stocktake, make a plan on precisely how it will be done. The whole point of the stocktake is getting an accurate count, so make sure that staff are in no doubt as to what is allocated to them and the order in which they should count. Ensure that stock is counted in a logical way that can be checked and reconciled against your records easily.

5. Cut distractions

While it may seem harsh, things like radios, mobile phones and excessive “chit-chat” should be discouraged during the stocktake, because it impairs your staff’s ability to count accurately. As a compromise you could look to build in some more breaks instead to maximise focus.

6. Motivate

While it can be a repetitive and boring task, try to find ways to make the job better for your staff. For example, you can ensure they understand the importance of what they’re doing to the business, and help them learn more about the business as a result. Buying them pizza afterwards could also be a helpful incentive!

7. Count everything

It is stating the obvious to say that everything must be counted, but it is very important that no stone is left unturned. If certain stock is located in labelled boxes, each box must be checked: it cannot be assumed that the contents match the label. Similarly, whenever the exact number of a certain item is needed, it is insufficient to estimate the number to the nearest 10, 20, or 100 as the case may be, even if there are a very large number of items.

8. Check and re-check stock against your records

Be sure that the number from the stocktake matches your records. Where it does not, make notes to follow up on each discrepancy.

9. Use the information

After spending many hours on a stocktake, the effort somewhat goes to waste if it does not lead to meaningful analysis of any issues that are identified. If there are numerous discrepancies, it could mean that inventory handling procedures or security measures are deficient. Lots of wastage might mean either procurement or selling practices need to be reviewed, and if certain items are in worse condition than expected, this might be remedied by changing their location in the warehouse.

10. Learn for next time

Finally, once you have completed a stocktake, be sure to use what you’ve learned, not only from the results, but also from the process itself, to makes things better for the next stocktake. Depending on the speed at which you completed this one, and the accuracy of data found, you may have an idea of when is roughly a good time to have the next stocktake. Make a quick note of things that worked with staff, and things that didn’t. This should allow you to make the process more efficient in the future.

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