A stock take is a record of the inventory a business has on hand. A stock take needs to be conducted at least once a year but with the right processes and systems in place, businesses should conduct stock takes more regularly to ensure greater visibility of their inventory.
Proper inventory control is a key requirement for all product-based businesses. Stock taking is an essential part of inventory control as it allows inventory managers to know exactly what inventory they have on hand. If you do not have accurate inventory counts, you will find it difficult to replenish stock, keep track of inventory expiration dates and more.
When should I do a stock take?
Stock counts can be disruptive to the usual flow of the business. Often, businesses have to close their business for a day while they count, to ensure no stock is being sold or receipted while they tally up the totals. Alternatively, businesses might require their staff stay behind after hours to do a stock take. It is important to consider how frequently and how thoroughly you want to count your stock to best manage your business.
Why is it important for my business?
For any inventory dependent business, knowing what you have in stock is a key aspect of inventory control.
Ensure your business is meeting targets
If there is a large difference between your actual stock and the amount you thought you had on hand, you may not be on track with all your financial goals. Conducting regular stock takes will allow you to discover these discrepancies and fix them quickly.
Unfortunately, theft will affect your stock take numbers, resulting in discrepancies; theft also affects your inventory costs. While it might not immediately identify the thieves, conducting regular stock takes can discourage some employees from stealing and allow you to take action against it.
Discover stock issues
A regular stock take highlights problems with damaged stock, missing orders and poor stock control practices. Great inventory management software can track the quantity of your inventory, but not the quality of it. For example, your records might show that you have correctly received your raw materials but the stock take can reveal that a majority of that stock was damaged during delivery. Conducting regular stock takes allows you to find any issues and quickly resolve them.
Reduce inventory shortage costs
Inventory shortage cost are those costs that are incurred when a business runs out of stock, including time lost when your stock is unavailable, employees are idle, your machines are under-utilised and more; you could liken it to the opportunity cost of a lost sale due to lack of stock. Stock takes, coupled with great inventory management software, can identify which products are at risk of running out so you can quickly reorder the product in order to fulfil your customers’ orders.
Analyse product performance
Scrutinising your stock levels will reveal which products performed well and which didn’t fare as well. If you find that you are constantly overstocked on one item, it might be an indicator that it is not as popular as you thought it would be, and you’ll have to find ways of reducing the surplus stock. Alternatively, you might find that a product is doing well and would consider ordering more stock. Stock takes highlight how well each product is performing to guide adjustments of any forecasts where necessary.
How should my business carry out a stock take?
For businesses reliant on accurate stock numbers, how you do a stock take is just as important as the benefits. Here are some tips to improve the way your business conducts a stock take.
Use a barcode scanner
Counting stock manually is a task that is prone to error, especially as your inventory grows. Barcode scanning technology reduces these risks by allowing you to quickly count stock levels and store the data at the same time. A barcode scanner uses a light source, a lens, and light sensor to allow you to scan and view large amounts of data in one place.
Implement cloud-based software
Implementing inventory management cloud software is another excellent way to keep track of stock levels. Rather than storing data about stock levels manually, cloud software puts the information right at your fingertips, drastically reducing the risks associated with a manual stock take. Offering a centralised inventory dashboard, cloud inventory management software also stores information about each product which you can easily look up from any number of devices, like smartphones and tablets.
Keep the stockroom tidy
A messy, disorganised stockroom is difficult to work with and prone to stocktaking mistakes. Make sure your stock room is organised and use labels to differentiate between items. It is useful to give stock counters a method for counting the stock, to avoid confusion among staff.
Encourage your stock counters to maintain focus when they are doing a stock take. Distractions such as cell phones and even small talk can cause staff to lose concentration and overlook important details.
Count each item
While it may seem tedious to count every item one by one, making general assumptions about how much stock you have can have drastic consequences. Make sure you count stock instead of relying on the labels; double check stock numbers to avoid costly stocktaking mistakes.
How can I improve my stock visibility?
An accurate and efficient way of inventory control to avoid regular manual stock takes is to use inventory management software. A perpetual inventory system will automatically track stock levels as it is receipted, sold, or returned to the store. Employees can do a quick check on the inventory levels throughout the year without disrupting the flow of the business. Perpetual inventory systems tend to deliver the most up-to-date inventory figures.
A periodic inventory system controls their inventory at set periods of time, sometimes three to six months. Businesses with a periodic system count their stock at the end of each period to verify stock accuracy instead of doing spot checks throughout the year.
As a stock-based business, your inventory is one of your greatest assets. Using inventory management software and conducting regular stock takes allows you to have control over your stock and make better decisions to boost your bottom line.