What Is Stock Taking and How Does It Benefit Apparel Businesses?
Also known as inventory checking, stock taking is the practice of periodically checking your inventory (including finished goods and raw materials) level to ensure it matches what you have in your records. It also involves inspecting your inventory to be sure they are in good shape.
Keeping a tab on your stock items has numerous benefits. For one thing, it gives you full control over your inventory. Secondly, it can lead to lesser cases of stock discrepancies, which can impact your business negatively. Additionally, stock taking can improve your inventory management processes, leading to better customer satisfaction. Accurate data is essential for maintaining reliable stock levels and ensuring effective inventory management.
Though somewhat time-consuming, stock-taking is vital for every apparel and fashion business. In this post, we will be diving a bit deeper into what stocktakes are about and why they are important. Understanding and managing stock levels helps you run your business efficiently.
Modern cloud based software can simplify and modernize the stocktaking process.
Best of all, we will share tips to make taking stock less cumbersome and faster.
Let’s get into it!
What is Stock Taking?
Stock taking is the process of conducting a physical inventory and performing a physical inventory count to determine how much inventory and how much stock you have on hand. It involves counting the quantity of each item in stock and then matching it with what you have in your records.
Sometimes referred to as stock counting, the overarching goal of stocktaking is to monitor existing stock, and identify any discrepancies that may exist. Regular inventory counts of all inventory items are essential for maintaining accurate records and preventing discrepancies. Discrepancies found during stocktaking may arise from human error, theft, or data entry mistakes, and require thorough investigation. It provides a snapshot of the current state of your inventory, enabling you to evaluate your stock accuracy, identify potential issues, and make informed decisions regarding procurement, sales, and overall inventory management.
Importance of Stock Taking
Accurate stock management is crucial for several reasons. Here are some of them: Stocktaking is vital because it is the most effective way of maintaining accurate, up-to-date stock records for each inventory item. Regular stocktaking helps keep inventory records and records accurate, which is essential for effective inventory management.
Identifying stock discrepancy information during stocktaking leads to efficiency gains in business operations by streamlining processes and improving overall workflow.
1. Reduces Stock Discrepancy
Stock taking helps identify any discrepancies between recorded inventory levels and the physical stock on hand. These discrepancies can result from theft, errors in recording, or other issues. ‘Inventory shrinkage’ refers to the loss of stock due to theft, fraud, damage, or administrative errors.
Stocktaking also helps you identify and set aside damaged inventory, ensuring these items are properly labeled and excluded from sellable stock to maintain accurate inventory records and prevent miscounts.
Uncovering these irregularities during stock counting can lead to better inventory control, fewer instances of stockouts, and better financial performance. Additionally, stocktaking reduces operational costs by minimizing storage costs and time spent resolving inventory errors.
2. Optimizes Inventory Levels
Stock taking provides insights into the actual stock levels of each item. By comparing these levels with the desired stock levels, you can easily identify products that are performing well sales-wise and those that aren’t. Stocktaking also identifies slow-moving or ‘dead’ stock through the analysis of inventory turnover.
Additionally, it helps uncover situations where there is more stock than needed, so businesses can take action to prevent overstocking and related issues.
This knowledge allows you to adjust your procurement and inventory management strategies, avoiding excess inventory costs or potential stockouts.
3. Prevents Financial Inaccuracies
Accurate stock records are crucial for maintaining reliable financial statements. Stock taking ensures that the recorded inventory values match the physical stock, enabling businesses to report their assets accurately and avoid any potential discrepancies that may lead to financial inaccuracies.
4. Enhances Customer Satisfaction
Consistent stock taking helps businesses maintain optimal inventory levels, reducing the likelihood of stockouts and ensuring timely order fulfillment. This, in turn, enhances customer satisfaction by meeting their demands promptly and efficiently.
Is Stock The Same As Inventory?
If you’ve been following this post to this point, you will notice we’ve mentioned stock and inventory several times, almost using them interchangeably.
But is stock the same as inventory? Well, not exactly!
Stock is a term used to refer to the finished products you have available. This includes products on your shelf waiting to be bought, and those that have been paid for by customers but yet to be shipped out.
Inventory, on the other hand, refers to both finished goods and production materials, such as raw material, sitting in your warehouse. You will need a reliable inventory system to accurately monitor your inventory level. An inventory management system is essential for both retail and manufacturing business operations to track finished goods and raw material accurately, ensuring efficient stock control and smooth production processes.
Streamline your processes with a tailor-made inventory management solution.
Pre-Stock Taking Preparation
Effective inventory management starts long before the actual stock taking begins. Pre-stock taking preparation is a critical phase that lays the groundwork for a smooth and accurate stock take. By investing time in planning, you can avoid common pitfalls and ensure your inventory data remains reliable.
Begin by developing a well thought out strategy for your stock take. Clearly define the scope of your count—decide whether you’ll be counting your entire inventory, specific stock items, or just raw materials. This helps focus your efforts and ensures no inventory item is overlooked.
Next, schedule your stock take during a period of low business activity. Choosing off-peak times minimizes disruptions to your daily operations and allows your team to count inventory without distractions. Communicate the schedule to all relevant staff so everyone is prepared and aware of their roles.
Gather all the necessary tools and equipment ahead of time. Equip your counting teams with barcode scanners, mobile devices, and counting sheets to streamline the process of physically counting stock. Using technology not only speeds up the stocktaking process but also reduces the risk of human error, helping you maintain accurate stock levels.
By carefully preparing for your stock take, you set your business up for success, making it easier to track inventory, identify stock discrepancies, and optimise inventory management across your entire operation.
How Do You Perform a Stocktake?
The process for performing a stocktake is very simple and can be done in the following steps:
- Plan and Prepare: Every stocktake process starts with a detailed plan. This involves assigning roles and duties to team members and creating a schedule for the stocktake. It will also require making arrangements to avoid disruptions to your business operations during the stocktaking period. Before starting, make sure to organize the stock room to ensure all items are accessible and properly arranged for an efficient count.
- Start Counting: This is the most crucial part of the stock counting process. For best results, we’d recommend pausing sales and shipment momentarily to ensure accurate counting. What’s more, it’s always best to count from warehouse to paper than the other way around. In other words, first, count what you have in your warehouse and then check if it matches what you have in your records. Collecting accurate stock data during this step is essential for effective inventory management and to prevent issues like overstocking or order fulfillment problems.
- Investigate Discrepancies: The whole essence of stocktaking is to discrepancies in inventory levels – which are always bound to happen – in your inventory levels. Once you spot them, you will want to investigate the root cause of it. Doing so helps forestall future occurrences.
- Reconcile Inventory Gaps: It’s never enough to investigate discrepancies – you must go the extra step to reconcile them, ensuring what you have physically in your warehouse matches what you have on records. Stock adjustment entries may be required in the computer system to correct discrepancies and maintain accurate inventory data.
Methods for Stock Taking
There are a couple of techniques you can use to track your stock to ensure there are no discrepancies. One traditional method is periodic inventory, which involves scheduled manual counts of stock at specific intervals. Using the right method will make successfully managing inventory an easy affair.
That being said, here are some battle-tested techniques you can try.
Additionally, inventory software can help in successfully managing stocktaking processes by streamlining tasks, improving accuracy, and enabling real-time tracking.
1. Annual Stock Taking
Annual stocktake is exactly what the name implies: checking and counting materials and products on hand once a year.
This method best suits you if you handle stock keeping yourself, or with the help of a few hired hands.
2. Periodic Stock Taking
This method involves conducting stock taking at regular intervals, such as monthly, quarterly, or annually. During these predetermined periods, the entire inventory is counted. Periodic stock taking provides a comprehensive overview of the inventory, but it may be time-consuming and disruptive to daily operations.
Alternatively, cycle counting is a proactive inventory management method that involves regularly scheduled, incremental stock checks, helping to improve inventory accuracy and minimize operational disruptions.
3. Continuous Stock Taking
In this method, inventory counting is carried out continuously throughout the year, typically by counting specific items or sections of the inventory on a rotating basis. Continuous stock taking minimizes disruption to operations and provides more regular updates on inventory accuracy.
4. Spot Checks
Checking through your entire inventory takes a lot of time – and might be unnecessary in some cases.
Case in point: when you suspect a theft. Instead of sweeping through your warehouse, it might be better to do a spot check to find gaps in your inventory level. Spot checking consists of random counts of specific items to investigate suspected discrepancies.
Stocktaking vs. Stock Checking: What’s the Difference?
Stock taking and checking are both inventory tracking techniques that give you first-hand insight into your stock levels. However, they are used for different purposes.
Stocktakes are comprehensive audits you do to check the quantity and quality of the entire products and materials in storage.
Stock checks, on the other hand, involves doing the same, but for a specific set of product. For example, you can decide to check for all pleated dresses you have in stock to ensure there is enough stock to meet your customers’ demands.
It might also require checking to ensure there is enough safety stock available in your inventory.
What Is the Right Stock Taking Frequency?
How often should you do stocktakes for your business? The truth is, it’s totally up to you to decide. Once a year, twice a year, once a month, etc. are all fine.
But as a rule of thumb, counting your stock more often will enable you to identify discrepancies faster and easier, leading to efficient inventory control. In many jurisdictions, regular stocktaking is a mandatory requirement to maintain proper financial records.
Tips to Ensure a Smooth Stock Taking Process
Stocktaking doesn’t have to be a cumbersome, time-draining endeavor. Here are tips to ensure it goes smoothly and efficiently.
Use Barcode Scanners: This will make the process faster and easier, compared to physically recording the items in your warehouse.
Perform the Stocktake During Off-Peak Periods: You wouldn’t want to count stock in your warehouse while at the same time shipping out orders – it can only lead to mistakes. As such, it’s advisable to perform stocktakes during off-peak periods like weekends or holidays.
Don’t Rush It: As tempting as it might be to rush through the stocktake process, don’t do it, or else you risk repeating the process all over again. Worse, you could end up with inaccurate values in your system. Knowing exactly how much stock you have is crucial for making informed purchasing, production, and sales decisions.
Monitor Stock Movements: During the stocktaking process, keep track of all stock movements in real time. This ensures your records are always up to date and helps maintain accurate inventory levels.
Do It Regularly: Performing stocktakes once in a long while won’t cut it – you need to do it as frequently as possible to ensure your business stays healthy. Regular stocktakes help prevent inventory theft, detect discrepancies early, and improve overall inventory management.
Move Your Business Forward With Uphance
We cannot overemphasize the importance of using the right inventory system to manage your stocktake processes.
You need a system that is capable of automatically tracking your stock as they move along your sales channels, and updating your inventory levels in real time. You need a system with a robust barcode scanner feature, as this will save you the trouble of manually counting your stock.
You need Uphance.
Uphance is an apparel ERP software uniquely designed for apparel businesses of all sizes and comes with a powerful stock-taking module.
Why not take Uphance for a spin to see things for yourself by starting a free trial?
FAQ
We’d say, do it as frequently as time permits. Regular stocktakes helps guard against inventory theft, identify slow moving and obsolete stocks. With this insight, you can forecast inventory purchase more efficiently.
Although they are sometimes used interchangeably, stocktake isn’t exactly the same as stock counting. While the former involves sweeping through a warehouse to spot gaps in inventory records, the later involves counting a portion of stock in a warehouse.
For best result and faster stocktaking, everyone – not just your warehouse staff – should be involved in the stocktaking process.
