If your business sells products, it’s essential to count your inventory. No matter how advanced or sophisticated your inventory system is, stocktaking is crucial to stock management. That’s why you should meticulously organise your entire stocktake process.
What is Stocktake Inventory?
A stocktake is also known as an inventory count. From the name itself, stocktake is the process of manually checking, counting, and recording the inventory your business has on hand. This is done to check whether the numbers in your inventory management system are accurate and to identify any other inventory issues.
As such, it’s a critical aspect of a product-based business’s inventory control and primarily affects its purchasing, manufacturing, and sales. Stocktaking needs and processes differ from company to company, but they’re performed for the same purposes.
Stock and Inventory: Is There a Difference?
Yes, they’re two different things, even if the two terms are used interchangeably. When you say stock, they’re products that you sell in your daily business operations. On the other hand, inventory includes any other items needed to manufacture, store, or sell your stock.
What is the Purpose of Stocktake?
Contrary to popular belief, you still need to do stocktake even if you’re using inventory management software. Whether or not you’re using state-of-the-art software to track inventory, stocktake is still required to maintain a good inventory.
Here are five reasons stocktakes are essential and why you should regularly do them for your business.
1. To Know Your Inventory Tracking Efficiency
Inventory management software significantly helps with inventory accuracy and in eliminating human error. But it’s not 100% foolproof, which means there’s still a chance that some things can be overlooked or unscanned.
Using inventory management software plus conducting regular stocktakes can ensure accurate inventory data in your warehouse. You can easily spot discrepancies because you can compare data from your stocktake with what you think you currently have on hand.
Furthermore, you can fix the discrepancy before it becomes a significant and costly problem like stockout, overstocking, or dead stock.
2. To Find Shrinkage
A stocktake can spot items easily missed in your inventory management system, like missing orders, damaged products, poor stock control, or even stock theft. The actual numbers might be different from what you have in stock, and doing a stocktake is often the only way you can find out and confirm it.
Of course, things like damaged or expired stock or unsold products whose demands have dropped can also point to inventory tracking that needs improvement or a complete overhaul. These can be just rare instances. But they can be indicators of a bigger problem in your operations and still cause significant problems for you in the future.
3. To Prevent Theft
Another common reason for inventory shrinkage (excess amount of listed inventory that does not exist in the actual inventory) is theft. When there are stolen goods in your warehouse, there will be discrepancies between the figures recorded in your inventory management system and those obtained during a stocktake. If your manufacturing or sales records can’t explain these missing items, it simply points to theft.
Thus, when employees know that a regular stocktake is conducted, it will make them think twice or even prevent them from taking items from the warehouse.
4. To Accurately Monitor Your Business Performance
You don’t want to play guessing games if you’re a business owner. You need accurate figures and exact numbers to know whether your business is meeting its targets or not. After all, this is how you can calculate your key metrics.
When you know your inventory is regularly and accurately monitored, you can improve your procedures, increase your efficiency, and eventually grow your margins. For example, you can decrease your safety stock or increase your price so that your products will sell faster.
5. To Organise Your Inventory
Regular stocktakes also result in better warehouse organisation because you know what products you have. For example, you’ll find which products are time-restricted and sell them off earlier to reduce the cost of storage or prevent just throwing them away because they’re expired or already obsolete.
Stocktaking and Your Inventory System
The importance and how often you need to do stocktakes in your business will depend on your inventory management system. Choose one that’s tailored to how you sell and can seamlessly connect all your workflow processes. Because when you do, you can get accurate data about your stocks, boost your sales, and take your business to the next level.
Be sure to research and compare your options for the best software to help you with your stock control. Consider a connected inventory management system such as Cin7 that can significantly reduce the burden of stocktaking for your business.