In the retail/wholesale business you are always striving to have a healthy inventory while minimising losses by any means possible. Stocktaking becomes essential in the attainment of a well-run business. One may wonder as to what exactly is stock-taking in any given retail or wholesale business and why is it important if by any means it is important. In his article, I attempt to have an overview of what stock-taking is and why start-ups in the retail/wholesale sector should exercise this more often.
What Is Stock Taking
Loosely defined, stock taking is the process of manually checking and recording all the inventory that your business currently has at hand. In essence, it is an attempt to ascertain the amount of stock that a business has at a given time while ensuring that there is a balance between the available stock and the record of sales and purchases.
There is a need to know the difference between stock and inventory to a business. To a business, the stock refers to the products it sells whereas inventory refers to any other items needed to make, store and/or sell the stock of a business. In the process f stock-taking, therefore, retail owners assess whether or not the stock tracking system is working efficiently. This is done by comparing results from the manual practice with those from the monitoring system. Stocktake thus allows for one to identify problems such as damaged goods, missing orders, poor stock control and even theft in due time to allow for corrective measures to be put in place.
Before You Start Taking Stock
First and foremost, one must understand the immensity of work involved in stock taking such that a properly scheduled date is set aside. Retailers are advised to find a time that works for the stuff so as not to create unnecessary distractions.
As the date approaches, the stock room should be kept clean and well organised. This will save you time and ensure that the stock-taking tools are well-organised way ahead of time. Such tools include stock sheets, write-off sheets, clipboards, scanners and even calculators although the list of tools largely depends on the type of stock to be counted.
Most importantly, those taking part in the stocktaking process should have clear goals and responsibilities. It is important to know the stock which is to be counted as well as how that stock will be counted. And when the counting begins, everything should be counted, no guesswork should be allowed while stock also should be valued correctly.
Now, there are various methods used in the stocktaking process as observed by various retailers:
The Periodic Stock Taking Method
This is done on periodic intervals which can either be quarterly or after every half-year period. This is usually used where the stock to a business comprises a few but expensive items. In the case where there are inexpensive items, these may be checked once a year while the expensive items require that you check them three to four times a year.
This method Is highly-priced because it attempts at giving the correct value of the stock thus accounting for an accurate balance sheet. However, if the stock-taking is not completed in time, the preparation of final accounts and balance sheets gets delayed. Hence this is one method you should use with great respect to time.
Pick Accuracy Stock Taking Method
This is done at the time of receiving new stock from suppliers. This method is done while issuances are being done to the store or the customer and it is normally completed by picking orders going out to customers or within a warehouse. This method is usually carried out by the store stuff for their own satisfaction and the accuracy of store materials. It is also worth not noting that the pick accuracy method is not a regular method of verification and it has no standard method of conducting the stocktaking process.
This method largely proves to be useful in organisations where a continuous system of stock verification is not functioning. However, this method does not get any official recognition as the shop owners will not be furnished with such information as storage excess among other important markers to the stock
Annual Stock Taking Method
This is done in the last month of a business` financial year. Depending on the size f the retail/wholesale outlet, the shop may be closed for a few days while the stot taking process is underway. This method follows the reasoning that balances shown on the stock management system should tally with the physical checks done at the end of a financial year. If a shortage or excess is identified on the day of checking the same should be present on the last day of the finical year.
This method gives the quantity of actual stock of all items held in stock on a particular day which makes the stock figures to be authentic and reliable. Irregularities in stores are often exposed while checks on employees are provided. However, one should also be wary of the facet reasons for discrepancies between actual stock and book stock cannot be traced easily due to the passage of time hence follow-through might be difficult/
Continuous Stock Verification
This is a method where verification is done throughout the year as a pre-determined plan of action. Items are grouped and the subsequent dates for their checking are set. As a result, a perpetual inventory record for each item is maintained showing all transactions so that reconciliation can be done fairly easily. This allows for the verification process to continue without necessarily freezing the entire operations of a store.
Timely detection of obsolete and surplus items is guaranteed and this makes it fairly easy to take corrective steps within a reasonable time. However, because this system is continuous, it tends to be expensive and small enterprises may not be able to adapt to it.
The above are some of the fundamentals to take note of where one desires to exercises stock-taking in their respective businesses.