For Labamu Friends who run businesses, especially in the retail or culinary sectors, managing inventory is key to smooth operations. One of the most effective ways to ensure inventory control is through stocktaking. More than just counting inventory, stocktaking can prevent losses and help keep your business running smoothly. So, check out the full explanation here!
What is Stock Take?
According to Unleashed, stocktaking—also known as inventory checking or stock counting—is the process of checking and recording the quantity and condition of physical stock on hand. This is then compared with system data to ensure there are no stock discrepancies.
The process can be done manually or using technology such as barcode scanners or other software. This activity not only maintains data accuracy but is also a crucial part of inventory management, influencing purchasing, production, and sales decisions.
Types of Stock Take
There’s no one ideal type; stocktaking procedures vary from company to company, depending on business size, industry, and available resources. Various techniques can be used, and the following are some of the most common types.
1. Periodic Stock Count
Periodic stock counts are conducted periodically, either monthly, quarterly, or every six months. All physical stock is counted and recorded, then compared to system data. High-value items or those with short shelf lives are typically checked more frequently, while low-value items are sufficient once a year. This method helps maintain inventory accuracy without unduly disrupting business activities.
2. Continuous (Perpetual) Stock Count
Continuous stock counts are conducted throughout the year according to a predetermined schedule. Items can be grouped into categories such as A, B, and C, with varying check frequencies depending on priority. Every stock movement is recorded in real time so discrepancies can be promptly identified and corrected. This technique reduces operational disruptions and simplifies year-end reporting.
3. Pick Accuracy
Pick accuracy is the process of checking stock when receiving goods from suppliers or when shipping orders to customers. Items to be shipped are typically placed in a dedicated area to verify their conformity to the invoice or order sheet. Implementing pick accuracy helps minimize shipping errors, reduce returns, and maintain customer satisfaction. This method is especially important for businesses with high order volumes.
4. Stockout Validation
Stockout validation is performed when an item’s stock runs out or approaches zero. This process includes recording the event, reordering the item, and analyzing the causes, such as forecasting errors, spikes in demand, or supplier delays. By understanding the causes, businesses can prevent similar issues from recurring. This method also helps maintain optimal product availability and customer service.
5. Annual Stocktaking
Annual stocktaking is a stock count conducted once a year, usually if periodic or continuous methods are not used. During this process, the warehouse or store may be temporarily closed to allow for a comprehensive inventory count. The results are used for data validation, financial reporting, and regulatory compliance. While less frequent, this method is essential for providing a comprehensive overview of inventory conditions.
6. Spot Checks
Spot checks are random stock checks performed when data discrepancies are detected. For example, discrepancies between physical stock and records in the inventory system. These random checks help identify causes such as lost items, theft, or recording errors. Spot checks are flexible and offer a quick way to maintain accuracy without waiting for the next scheduled stock check.
The Importance of Stock Take for Business
Stocktaking is a crucial step in assessing actual inventory levels, allowing you to manage demand more accurately, understand your business’s financial health, and identify potential problems that could lead to losses. Here are some other benefits.
1. Maintain Stock Accuracy
By knowing your actual stock availability, you can make informed decisions regarding purchasing, sales strategies, and production. Accurate inventory also prevents you from running out of stock or accumulating unsold items. This helps maintain cash flow and optimize storage space.
2. Finding Stock Differences
Cloud-based inventory systems are helpful, but they can’t detect every problem. Manual stocktakes can uncover damaged goods, missing orders, theft, or recording errors that the system missed. By detecting these early, you can improve your process and prevent recurring losses.
3. Optimizing Inventory Management
Accurate stock data allows you to manage storage locations, reorder times, and even the quantity of items to stock. For businesses with a periodic inventory system, stock takes are the only way to get an up-to-date inventory picture. For those using a perpetual inventory system, stock takes are still essential for data validation.
4. Minimize Fraud and Stock Shrinkage
Discrepancies between inventory records and actual stock often arise from theft, mishandling, or damage to goods. Regular stocktakes help detect these issues more quickly. Furthermore, regular checks also increase employee vigilance, as they ensure inventory is being monitored.
5. Improve Sales Strategy
Stocktaking provides insight into which products are actually slow-moving, despite their apparent stability in sales reports. With this information, you can adjust your marketing strategy, organize promotions, or create product bundles. As a result, inventory moves faster and business profits increase.
Conducting regular stocktakes isn’t just about counting inventory in the warehouse; it’s also about building a more organized, efficient, and profitable business foundation. With accurate inventory data, you can make better decisions, avoid losses, and maximize sales potential.
All of this will be much easier if you have an integrated business management system. Manage your inventory, record transactions, and even generate financial reports in one convenient app using Labamu’s features and experience the convenience!
