Stocktaking, Definition, and How to Do It
Stocktaking is the process of physically examining stock levels for each of the goods and materials you sell to ensure that your information is current and accurate.
To guarantee that your organization can expand, it’s critical to have a firm knowledge of stock management. There is no way to manage your business effectively enough to foster growth without understanding what you have and how you’re handling your inventory levels. Without the proper equipment and a well-thought-out plan, the stocktaking method can be difficult to manage.
What Is Stocktaking?
The act of physically obtaining confirmation of the quantities and inspecting the condition of the items held is referred to as stocktaking, also known as stock counting or inventory checking.
Manufacturers may need to do a stock take for two reasons: to give an audit of the current stock or to find information about stock discrepancies. As a manufacturer, you must successfully manage different types of inventories in addition to stock for your business to operate at its best, so stocktaking is a critical component of inventory control. You now understand what stocktaking is and why it’s important.
Why Are Stocktakes Important?
It doesn’t take much insight to know that taking stock is an essential part of managing your manufacturing firm.
After all, your inventory, which consists of your raw materials, components, and subassemblies, is what you employ to create and market your products. You can be setting yourself up for failure if your foundation is weak. Imagine for a moment that you neglect stock management for a considerable amount of time.
You could very easily end up:
- a product running out of stock
- seeing that your cash is being held up by an overstocked warehouse
- arriving with a stockpile of useless dead stock
- Having a shipment of uninspected broken items in your possession
- ignoring potentially useful inventory management techniques
And these components can combine quickly to form a monster that spirals out of control.
Imagine that your stock data is so inaccurate compared to the reality that you are unable to fulfill orders on time without expending a significant number of resources on overstocking. However, not all is gloom and doom. The amazing advantages that come with having a reliable stocktaking procedure in place are what you should focus on most.
Benefits Of the Stocktaking
The results of your upcoming labor will be easier to see once you start managing your stocktakes accurately. Here are just a few of the numerous advantages you can anticipate discovering:
- Keep Your Inventory Up to Date
- Uncover Stock Room Issues
- Improve Your Sales Strategies
1. Keep Your Inventory Up to Date
It is impossible to overstate the value of accurate data.
The manufacture of your products benefits from maintaining accurate inventory data. Additionally, it will assist you in ensuring that you have finished goods on hand and ready to be delivered to consumers, as well as that you are not carrying negative inventory. Without it, your production planning can become out of date, and even worse, your customers might not receive their orders on schedule.
Do it correctly, though. You can reduce your company’s carrying expenses and maintain optimal inventory management.
2. Uncover Stock Room Issues
The goods and materials in your stockroom are susceptible to a wide range of factors.
To name a few, poor circumstances, a moist environment, improperly managed boxes, and even theft. Of course, most of these issues will only be isolated incidents; they are just a fact of doing business. However, there is no denying that by maximizing maintenance and security procedures, you can prevent losing more stock than necessary.
We’re discussing humidifiers, sophisticated locks, handling techniques, and similar things.
3. Improve Your Sales Strategies
Nothing like a thorough spring cleaning can purify the soul.
And stocktakes perform the same thing, except more frequently (we’ll talk about frequency later). The key takeaway from this is that by regularly monitoring your product inventory, you can establish a clear visual link between your sales data and what’s going on behind the scenes. When you see one of your pet items on the same shelf week after week, it won’t take you long to discover that it’s performing a lot worse than you imagined.
The opportunity will then present itself for you to modify your sales and marketing initiatives to accommodate the supply you already have on hand.
How Do You Write Stocktaking?
When it comes to writing a stock report, there are no hard-and-fast guidelines.
This is primarily due to various business models and how each ultimately requires system customization for precise stocktaking. However, some details should be evident from the stock report, specifically:
- Currently Available Stock
- Price Of the Stock
- Favored Or Despised Lines
It is much simpler to approach the actual drafting of the stock report once you are aware of the material that should be included. Here are some tips for creating the stock report and making sure it increases the company’s profitability.
- Create/Use A Template
- List Items with Cost/Selling Prices
- Set Up Dates for Stock Counts
- Calculate Projections/Loss/Profit
- Use Accurate Stocktaking Tactics
Create/Use A Template
In addition to being time-consuming, manually establishing a fresh template for each stocktake will make it more challenging to compare previous data.
Instead, use templates to test and experiment with several designs until the one that works best emerges. Then, for each subsequent stocktake, follow this specific template.
What should be included in the template?
- Item information
- State of excellence
- Date of expiration (if applicable)
- Cost as well as selling price
List Items with Cost/Selling Prices
The next step is to list the items after the template is in place.
Use an organized strategy once more to make it simple to stay on course and correct.
Sort things into appropriate categories, and arrange everything into reasonable groups.
Get the things stated on the template along with the previously given information from there.
Remember to include the figures for damaged, lost, or stolen stock.
They are frequently to blame when stocktakes don’t match up accurately with purchase orders and data gathered from the receiving end.
Set Up Dates for Stock Counts
Stocktakes are often planned annually for large businesses. It is best to maintain consistent and routine stocktakes, nevertheless. For example, prioritizing inventory sections for weekly or monthly stocktakes greatly simplifies troubleshooting any imbalances.
If not, you must wait for a full year to pass. The more time passes between stocktakes, the harder it is to locate missing stock.
When dealing with high-risk and expensive inventory, small, consistent cycles are essential for preserving a healthy rate of stock movement. Use a simple template for quick reference and schedule these regularly.
The stock report is already written as of this moment. The report can be utilized for numerous purposes if the essential information indicated above is presented on it in an organized manner.
One way is that the stock report will indicate how many dead goods are present in the warehouse.
Additionally, it will give a precise figure for the value of inventory in terms of money and insight into whether orders should rise or decrease.
With the aid of this data, insightful calculations that ultimately determine the future of the company can be made.
Due to the importance of accuracy in stock reports, double and triple counts are advised whenever the numbers do not add up.
Use Accurate Stocktaking Tactics
As the last suggestion, only manage stock takes using precise procedures and tools. The finest outcomes can be anticipated when the best solutions are applied.
Just maintain your organization and concentration.
Look no further than New G Solution if you require assistance managing your inventory. When it comes to the creation of specialized and packaged solutions, we are the market leader.
What Is Cycle Counting?
Cycle counting is a stocktaking technique that requires periodically examining a predetermined portion of your inventory on predetermined days. In essence, you divide the annual warehouse count into multiple smaller micro-stocktakes rather than doing it all at once.
The major advantage over traditional stocktaking is that you eliminate the disruption associated with a single annual take. This has a number of advantages. Cycle counting is therefore particularly well-liked by huge companies that are unable to completely shut down their operations. Additionally, it can lessen the noticeable variance that occasionally occurs when there is a longer interval between takes.
Improving Your Stocktaking
Although there isn’t a single approach that will be effective for every business, there are numerous ways to enhance the way you record stock. Here are some pointers to get you going.
- Use A Barcode Scanner
- Dodge Distractions
- Keep The Warehouse Tidy
- Get Everyone’s Input
- Consider Dedicated Software
Use A Barcode Scanner
Manual counts are error-prone, especially as your business expands. By enabling you to swiftly capture stock levels and store the data at the same time, barcode scanning technology lowers these hazards.
To scan and view a lot of data in one place, a barcode scanner uses a light source, a lens, and a light sensor.
You may miss crucial details due to distractions like background noise and smartphones.
Although removing them might seem cruel, focusing on the task at hand will enable you to complete it swiftly and effectively.
Keep The Warehouse Tidy
Stockrooms that are disorganized and messy slowdown operations and increase the possibility of errors. Everything will be simpler if your warehouse is more organized, ideally with labels to distinguish between items.
Also read: The Full Guide About Multi-Warehousing
Get Everyone’s Input
Ask the employees who participated in each stocktake for advice on how the subsequent one may go more smoothly. Additionally, request their input on any broad improvements based on the findings of the count.
Consider Dedicated Software
You can see real-time stock level updates with inventory management software, which reduces your reliance on stocktakes for accurate information. You can start automating the entire procedure when used in conjunction with other tools, like barcode scanners.
FAQ (Frequently Asked Question)
- What Is Another Word for Stocktake?
- What Do You Mean by Stocktaking Performance?
- Who Is Responsible for Stocktake?
- When Should Stocktake Be Done?
- What Is a Good Stocktake Result?
What Is Another Word for Stocktake?
Need words that describe stocktaking? You can substitute any of the following synonyms from our thesaurus in their place:
- Assessment of values
- Checking or counting
- A systematic review or assessment of something
What Do You Mean by Stocktaking Performance?
Annual performance reviews, which are essentially performance audit functions, focus on monitoring the right alignment of performance results with organizational and employee growth in addition to the typical employee assessments.
By maximizing employee performance and accurately recognizing their strengths and limitations, performance reviews assist organizations in accomplishing their goals.
On the other hand, it aids in defining a career path for employees and aids in offering recommendations for job performance. Performance audit is a more comprehensive phrase because it includes the investigation, use, and management system methods to determine whether the business is attaining economy, efficiency, and…
Who Is Responsible for Stocktake?
The Assets Financial Accountant in the Finance Division
- is in charge of organizing and supervising all stock takes for the trading company. This must be consistent with, complementary to, and compatible with current University asset stocktakes
- is to give stakeholders the information they need to make informed decisions about how to conduct stock takes.
- must make sure that stock takes are done at least twice a year, on June 30 and December 31, for trading firms. The most important stock take occurs on December 31 to help with the university’s yearly financial statements, and
- Two employees must do the stocktake in line with the instructions; one of them must be independent and not in any manner in charge of the stock.
When Should Stocktake Be Done?
What degree of control you desire over your company will determine how this plays out. How do we interpret that? Here is an illustration. Imagine if a part of your company was losing money because of ineffective control measures including stock losses or shrinkage, inadequate portion control or dispensing techniques, and internal and external theft. When would you prefer to learn about it now? a year’s end? when the month is over? Quarterly? Weekly? Daily? You will be in a better position to decide how frequently you should conduct stocktaking once you have the answer to this.
What Is a Good Stocktake Result?
Here are the seven essential measures for doing a good stocktake:
- Plan, Schedule, And Prepare
- Establish Clear Processes & Goals
- Know What You’re Counting
- Accuracy Is Key
- Deal With Variances
- Value Your Stock
- Review The Process