It’s busy season, and endless orders are coming in. But when you try to fulfill one, the item’s out of stock, even though your inventory software says there are two left. How could that happen?
Tracking inventory is never 100% accurate, regardless of what software or manual methods you use. Regular stocktakes, where you count each item in stock, can get you closer to an accurate quantity. And learning how to perform these counts efficiently guarantees your records have the right numbers.
Here’s a guide to what stocktakes are and how to conduct one.
What’s a stocktake?
A stocktake is a full assessment of a company’s goods and materials. It involves logging every product and cross-checking it against inventory data to make sure the recorded numbers are accurate. This process takes a long time, so most businesses shut down for an afternoon or full day to complete it.
Any business that uses or sells physical items — from manufacturers with multiple factories to small retail stores — conducts stocktakes once a year or quarter to confirm stock numbers. They’re integral to avoiding discrepancies and helping customers receive correct orders.
The benefits of stocktaking
Here’s why stocktakes should be on your to-do list:
- Keep accurate inventory records: Inventory management software is good at keeping count, but sometimes, people make mistakes when inputting information. Stocktaking is an opportunity to double-check inventory and correct human error.
- Manage finances: Spotless inventory records make it easier to value stock and ensure correct financial statements. Stocktaking also identifies obsolete or dead stock — the unsold or unused pieces of inventory.
- Prevent stockouts and overstocks: Knowing what’s in stock makes it easier to plan for the future because you have a better idea of what needs reordering and when. Without this knowledge, you risk stockouts, which frustrate customers and lead to lost sales, and overstocks, which generate high carrying costs.
- Avoid inventory loss and shrinkage: Inventory loss and shrinkage happen due to waste, misuse, and even fraud. Stocktaking prevents these issues by revealing patterns of loss — and knowing the patterns helps you break them.
- Run the business more efficiently: If there’s constantly too much or too little stock, there’s room for improvement. For example, there might be problems with your inventory management system, or you may need to find more punctual suppliers. Stocktaking is the first step to discovering and solving these issues.
A step-by-step guide to performing a stocktake
Let’s discuss how to do a stocktake efficiently. The process has seven steps.
1. Prepare
First, decide when to conduct the count. Schedule it for a time that works well for employees and won’t drastically disrupt operations — for example, a Friday during a slow season. Estimate the stocktake’s duration and schedule breaks for the team to help them stay focused. People can also work in shifts so every section gets counted twice, guaranteeing accuracy.
2. Count and log inventory
As the stocktaking team goes through inventory, they should manually count each item and log the quantity. They shouldn’t be consulting the system to determine how much stock there is, since the numbers might be wrong. Instead, they should write down their findings separately or use barcode scanners to record information. They’ll compare their numbers to the system later.
3. Compare the stock count to records
After counting every item in stock, check the inventory records and note any discrepancies. It’s a good idea to have more than one person on this task so everything gets double-checked. For maximum accountability, Fishbowl’s system attributes every piece of data to the person who originally inputted it.
4. Address discrepancies
If the stock count doesn’t match records, update and correct the entries. Then, consider what caused these discrepancies and how to solve those problems.
The root cause can be hard to identify, but if you notice a pattern of missing high-value stock, it could be theft. If errors seem random, sporadic, and not correlated with the value of items, human error is more likely, and simpler workflows might be the solution.
5. Determine what to order next
Once you’ve counted everything, compare it to what you actually sell. Assess which products are overstocked, understocked, or at the right level. Use this information to adjust your ordering strategy and reorder points to optimize inventory levels.
6. Start improving inventory control
Consider how the team manages inventory on a day-to-day basis. If a particular product gets damaged often, you might reevaluate handling and storage procedures. Addressing these issues leads to better inventory control.
7. Plan the next stocktake
When you’re finished, reflect on how the stocktake went and how to improve future counts. This ensures that each one is more efficient than the last.
If there are many discrepancies, it might help to do stocktakes more often until you’ve identified and corrected all the gaps in your inventory management practices.
6 tips to improve stocktaking
Stocktaking may be tedious, but it doesn’t have to be painful. Here are six tips to make the most of your next inventory stocktake.
1. Plan carefully
Attention to detail is crucial, so let staff concentrate on the count. Stocktaking when you’re closed prevents confusion — if you’re making sales or fulfilling orders while counting, it’s hard to keep up with the ongoing changes.
While planning the count, make sure the team has everything they need. This includes supplies like inventory sheets, pens, and barcode scanners as well as access to software.
2. Train the team
Properly training the stocktaking team minimizes mistakes and encourages efficiency. This includes making sure they know how to use the tools and technology needed, like barcode scanners or inventory management software.
3. Organize stock
If the inventory area is messy or disorganized, it’s harder to sift through and keep track of individual pieces of stock. To make the counting process easier, arrange items in logical order, group similar items together, and clearly label different sections of inventory.
It may also be helpful to tidy up the warehouse or storage space before the stocktake to ensure all products are accessible and that there’s enough room to work efficiently. Do this a few days beforehand so teams aren’t counting while you’re organizing stock.
4. Use technology
Technology streamlines and enhances the stocktaking process by reducing human error and making it easier to track inventory. Upgrade to inventory management software that automates data entry and updates inventory records in real time. This way, counts are as correct as possible.
Handheld barcode scanners are another helpful tool. They speed up the counting process and ensure accurate logging.
5. Conduct regular audits
Make counting easier by regularly auditing stock and updating records throughout the year. These audits can be smaller than the annual stocktake. For example, you might perform cycle counts where you check a different section of inventory once a month. Conducting periodic counts or mini-audits also spreads the workload more evenly, making the main stocktaking event less overwhelming. Fishbowl’s Cycle Count List report does a great job of organizing items and quantities with blank spaces to record your counts.
Inventory audits aren’t just an opportunity to count stock. You can also evaluate quality, noting damage, spoilage, and classification mistakes. Since you only count items during a stocktake, it’s important to check the efficacy of control measures in the warehouse at regular intervals.
6. Double-check every time
Errors are unavoidable. But if you don’t address them, they may compound and lead to problems later.
Make sure the stocktaking team includes at least two people counting each section of inventory to verify numbers. You could even have two teams count on different days to make sure reports are accurate. Then, if there are discrepancies, you can address them before finalizing the data. Catch mistakes earlier and maintain reliable inventory records.
Streamline the stocktake process with Fishbowl
Stocktaking is a big job, but Fishbowl helps you handle it with ease. With QuickBooks integration and hundreds of other add-ons, this advanced inventory management solution simplifies tracking, improves accuracy, and saves valuable time.
Streamline your next stocktake with Fishbowl. Schedule a demo today.