Performing a complete stock take at least once year can be tedious, however it is critical for maintaining healthy inventory levels and minimising losses in a business. Stock takes are important because they reveal discrepancies between inventory stock records and the amount of stock you actually have. Uncovering the issues that contribute to stock loss or incorrect counts can help move your business in a more profitable direction. Here are the most common reasons for a stock take discrepancy and what you should do to resolve them.
What causes stock take discrepancies?
There are many reasons business owners will see stock take discrepancies. Here are the most likely causes. Note, causes can vary greatly depending on the industry and inventory record keeping methods used. Stock take discrepancies can occur due to:
- Damaged stock being discarded, without updating records
- Stock stored in the wrong location
- Lack of stocktaking software
- Human error during the stock take process
- Theft
- Incorrect labelling
- Stock being mistaken for a similar product
- Inbound and outbound stock not being recorded accurately
- Faulty inventory management
- Incorrect units of measurement being used - e.g. kilograms instead of tonnes, or counting boxes instead of single items.
Checklist for stock take discrepancies
It's important to work out why a stock take discrepancy has occurred. Here are the possibilities you should investigate, in order of likelihood:
- If your count doesn't match your records your first action should be recounting that particular product – the discrepancy could simply be a mistake during the original counting process.
- Check if the location of the stock is incorrect. The stock may be present, but have been stored in the wrong place.
- Check if the stock has simply have not yet arrived from your supplier, and been incorrectly receipted in to the warehouse.
- Check whether the right unit of measurement has been used.
- Check that the SKU or product identification number is correct.
- Ensure the product has not been mistaken for a similar product.
- Double check your inventory records, perhaps the discrepancy may be as simple as a mathematical error.
- Ensure there is no missing paperwork, for example, sales or orders that have not been accounted for can often unbalance your stock take count.
- Investigate whether employees or customers have been stealing stock, which means you might need to consider CCTV, security tags on stock or security checks.
Creating a clear plan for stock takes
It's important that a clear plan of attack for counting stock is put in process to avoid the stock take mistakes mentioned above. By developing a well-structured process that employees and managers can follow together, you can all avoid the many pitfalls. These include organising your stock room before a stock take is started, ensuring your staff are well trained to look out for the correct unit of measurements, and paying attention to detail when looking at product descriptions or SKUs.
Ensure you're checking against current inventory data
The goal of a stock take count is to check whether your count matches your data on hand. It is therefore vital to exclude items that have already been invoiced to customers but have not yet shipped, as well as inventory that may have arrived but has not yet been entered into your inventory system. Use a perpetual inventory management system to keep an updated record of your stock movements as it happens.
Automating your stock take process
Finally, if you are not already logging your inventory into an automated system then you are certainly losing a lot of time. Human error cannot be helped, no matter how meticulously you are entering data. Find an automated system, use barcode scanners and use inventory software that can monitor orders, track items, and take stock with all your information recorded centrally.
