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.
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.
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 physically verifying and assessing the inventory levels 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. 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:
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. It also helps you identify products that have been damaged, and so can’t be sold.
Uncovering these irregularities during stock counting can lead to better inventory control, lesser instances of stockouts, and better financial performance.
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.
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 sitting in your warehouse. You will need a reliable inventory system to accurately monitor your inventory level.
Methods for Stock Taking
There are a couple of techniques you can use to track your stock to ensure there are no discrepancies. Using the right method will make managing inventory an easy affair.
That being said, here are some battle-tested techniques you can try.
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.
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.
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.
Tips to Ensure a Smooth Stock Taking Process
Stocktaking doesn’t have to be a cumbersome, time-draining endeavor. Approaching it systematically via a well-thought process can save you time and make the work less demanding.
With that said, here are some tips that will come in handy before, during, and after a stock take.
Tip #1: Plan and Prepare
Before conducting a stock take, it is crucial to plan and prepare adequately. Here are tips that can help.
- Set a Schedule: Determine the most suitable time to carry out the stock take, ensuring minimal disruption to daily operations. Consider quieter periods or weekends when there is less activity.
- Allocate Resources: Assess the manpower and equipment required for the stock take. Depending on the size of your inventory, you may need a team of employees, barcode scanners, clipboards, and stock sheets.
- Organize the Area: Ensure that your stockroom or warehouse is well-organized and items are properly labeled. Clear any clutter and arrange items in a logical order, making it easier to count and locate them during the process.
Tip #2: Choose the Right Stock Take Method
It’s important to select the right stocktake method beforehand, as doing so will make your life and work easier.
Luckily for you, we’ve discussed some of the best methods to try in this post already. You might want to revise it a bit.
Tip #3: Initiate the stocktake
After planning, preparing, and selecting the right stocktake method, the next step is to initiate the process.
- Begin with a Stock Snapshot: Record the initial stock levels before commencing the count. This snapshot will serve as a reference point for identifying discrepancies later.
- Communicate Clearly: Provide clear instructions to the team members involved in the stock take. Explain the counting method, clarify any procedures, and address any questions or concerns.
- Sectional Approach: Divide the inventory into manageable sections or zones. Assign teams or individuals to specific sections to ensure a systematic and efficient counting process. This approach reduces confusion and minimizes errors.
- Accurate Counting: Ensure accuracy during the count by following these guidelines:
- Count each item individually, recording the quantity on the stock sheets or scanning devices.
- Verify item codes, descriptions, or barcodes to eliminate errors.
- Use caution with items that may be easily damaged, perishable, or fragile.
Tip #4: After the Stocktake is Completed
Once the stock take is complete, it’s crucial to reconcile and review the results:
- Reconcile the Counts: Compare the physical counts with the recorded inventory levels. Identify any discrepancies and investigate the reasons behind them. Common causes include theft, damaged goods, data entry errors, or inaccuracies in stock management systems.
- Resolve Discrepancies: If discrepancies exist, take immediate action to rectify the issues. Conduct thorough investigations, correct any errors in stock records, and implement measures to prevent future discrepancies.
- Update Inventory Records: After reconciling the counts and resolving discrepancies, update your inventory records to reflect the accurate stock levels. This step ensures that future stock takes and inventory management processes are based on correct information.
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?