Stocktaking. It’s a task that will never be on any business manager’s Favourite Things To Do list, but it’s something that has to be done, at least every now and then. When carried out the right way a stocktake will give you a clear and accurate picture of what inventory you have (and its value), what stock you need to buy, and what inventory items are missing, over-supplied or slow-moving. A stocktake will also reveal the true quality of your record keeping processes and alert you to areas where better inventory management could improve your business operations and boost profits.
Much like anything else in business, there are good ways and bad ways to go about a stocktake. So what is the current state of thinking when it comes to ‘best practice’ in the world of stocktaking? Here are some tips.
Your stocktake should be planned well in advance to ensure that the right people, tools and processes are in place on the day or evening of the job. Choose wisely when selecting which staff will be doing the stocktake – those with a track record of thoroughness and attention to detail will likely do a better stocktake job than employees who have shown a ‘near enough is good enough’ approach to their normal work.
If you’ve decided to conduct your stocktake outside of normal business hours, be sure to give your stocktakers plenty of notice of when and for how long they’ll be required. And particularly if you’re expecting the stocktake to take a long time, encourage your workers to turn up in comfortable clothing.
Prior to the stocktake work out what is the best – ie the most speedy, efficient and accurate – method for counting and recording inventory items. There are plenty of things to consider here. For example, if a certain item is stocked in multiple locations, which location should be counted first? What should your stocktakers do when they come across damaged or expired inventory? And should units be counted from left to right or up and down? By determining these things prior to the stocktake you can be sure that you cover all the bases in your pre-stocktake briefing to the workers. Ultimately what you want is for all members of your stocktake team to be going about their task the same way, armed with all the information they need to do the job properly.
Pre-planning should involve making sure that your stocktakers have what they need on the day. Typical tools for a stocktake include pens, calculators, stock sheets, clipboards, hand-held scanners and mobile devices. Whatever tools you’ve chosen for the job, ensure you have sufficient supplies at hand so that your team can hit the ground running.
Just prior to the actual stocktake, ensure that your stockroom is in the type of order that will allow for the most accurate counting of inventory. Physically separate inbound and outbound shipments from the rest of your stock so that those products don’t get wrongly counted as warehoused items. Cast an eye over your warehouse to check whether there are orphaned items lying about, or for anything else that looks out of place. Check inside rooms within your premises where misplaced inventory might be. Check also that all stock items are labelled properly and stacked in a way that makes counting as easy as possible. Ideally when it comes time for the stocktake your work area will be tidy, neatly organised and free of anything that could slow down or threaten the smooth execution of the task.
Game On – Let The Stocktake Begin
Before your workers start the stocktake, it’s worth giving a pre-stocktake briefing (as noted above) to your team. Run through what is expected of them and what they need to do to make the stocktake successful. Check in with every stocktaker to make sure they know how the recording system works. And whatever the size of your inventory, there is one point in particular that should be emphasised to your workers above all others, namely: Count every item! The effectiveness of your stocktake will be largely determined by how thoroughly each worker does their job, and there is no room here for shortcuts. This should include opening every box to ensure that the item on the box label is indeed inside and in the right quantity. And under no circumstances should estimates be made. These are things that can’t be stressed too strongly.
Once the job is under way, do what you can to minimise distractions. Distracted workers are more likely to make mistakes, so discourage phone use, chitchat amongst staff and anything else that could disrupt a worker’s focus.
If it’s a lengthy stocktaking exercise, provide drinks and snacks for the team (a pizza break may go down very well!).
So you’ve completed the stocktake and you now have comprehensive, accurate and up-to-date data on your inventory. Apart from sending it all off to your accountant so as to meet your tax obligations, what can you do with all this information? What you can do is drill down into your data to find out what products and processes are working well for your business and what you need to discard or modify.
If your data analysis reveals an alarming number of missing or damaged items, it may be time to review your security measures and stock handling methods.
If your data indicates a number of categories of slow-selling stock (which you nonetheless would like to retain), you may want to re-organise your warehouse so that those items are brought together in their own space.
If you find there are significant discrepancies between the inventory you have and the inventory you thought you have, that could point towards an operational or systemic problem that requires your immediate attention.
Rather than consider stocktaking a necessary evil, it can be better thought of as a genuine opportunity to learn more about, and improve, your business operations. With every stocktake you learn from, the better your next stocktaking exercise will be. And the better your business will run.