Difference Between Stocktaking and Stock Control

Introduction

In the world of business, keeping track of what you have in stock is super important. Two terms you often hear are stocktaking and stock control. They're both about managing your stuff, but they do it in different ways. Let's break it down: we'll explore what each one does, how they work, and why they matter for making a business run smoothly. Let's dive in and make sense of the ins and outs of managing inventory.

What is Stocktaking?

Stocktaking, also known as stock counting, is the process of checking the stocks by yourself; basically, it is a manual process in which you have to check and record all the inventory that your business has currently opted for. It is an important part of inventory management or control, and it also creates an impact on your purchasing, production, and sales, so it is needed to check it on a regular basis.

Just like every other part of inventory management, how a company approaches stocktaking can vary a lot from one business to another. Each company's unique processes and needs shape how they tackle this essential task.

The term "stocktake" might sound like it's only about managing the stock you sell, but it's actually broader than that. It covers all the inventory your business relies on. For manufacturers, this means not just finished products but also the materials and components used to make them. Running out of these essential ingredients can be just as problematic as running out of finished goods, so it's crucial to include them in your stocktake process.

Why are Stockstakes Important?

In any business that deals with products, maintaining accurate inventory levels is a must for effective inventory control. In some places, it's not just good practice; it's a legal requirement. But even if the law doesn't mandate it, there are three compelling reasons why every business should make regular stock checks a priority.

Checking Your Inventory

It would help if you didn't rely solely on your system to know what you have in stock. Comparing what you counted during a stocktake with what your system says will always help you find mistakes. Fixing these mistakes early on can prevent bigger problems like:

• Running out of things to sell (stockouts)
• Having too much stuff (overstocking)
• Products becoming outdated before you can sell them (dead stock)

Example 1

Let's say you run a small clothing store. You use a computer system to keep track of your inventory, but you've noticed that sometimes it doesn't match up with what's actually on the shelves.

During a stocktake, you count all the T-shirts in your store and compare that number to what your computer says you should have. You find that the computer says you have 50 T-shirts, but you only counted 40.

This reveals a discrepancy, showing that your inventory system isn't always accurate. By fixing this mistake, you can avoid problems like running out of popular T-shirt sizes or ordering too many of a style that isn't selling well.

Example 2

Let's say you run an online bookstore and use a cloud-based inventory management system to track your books. One day, a customer complains that they ordered a book but never received it.

You check your system, and it shows that the book was shipped and should have arrived. However, during a manual stocktake, you realize that the book is nowhere to be found in your warehouse. This discrepancy highlights a potential problem that your inventory management system didn't catch: either the book was lost during transit or it was stolen from your warehouse. By doing regular stocktakes, you can catch these issues and take steps to prevent them in the future.

Meeting Business Goals

To make sure your business is doing well, you need to keep a close eye on things. That means getting the numbers right, especially when it comes to stuff like how quickly you're selling your products.

Once you know exactly how your inventory is doing, you can figure out ways to make your business run better and make more money. For example, you might decide to Keep less extra stock on hand in case something goes wrong, or demand suddenly increases.

Adjust your prices to make sure everything sells as fast as possible.

Stocktaking and Your Inventory System

How much stocktaking disrupts your business depends on the type of inventory system you use. If you have a periodic inventory system, like counting everything once a month, stocktakes are crucial. They give you a snapshot of what you have, but they can be disruptive. You might have to close for a day or ask staff to stay late.

On the other hand, if you use a perpetual inventory system, like Unleashed, stocktaking is less of a big deal. Your system constantly updates stock levels as you buy and sell, so you don't need to do big stocktakes as often. This makes the process less disruptive for your business.

How to Do a Stocktake

Stocktaking involves a few steps that every business should follow. Let's break it down into three stages: before, during, and after the count.

Before the Count

Pick a Date and Time: Choose a time when there are no distractions. You might close for the day or do it after hours. Plan time afterward to fix any mistakes.

Assign Roles: Make sure everyone knows what they're doing. Each staff member should have clear instructions.

Prepare: Just before counting, do two things:

• Stop any new purchases or sales. This avoids messing up your count.
• Clean up the area where you'll count. A tidy space helps things go smoothly.

During the Count

Include Everything: It might sound dull, but counting every single item is crucial. This means checking all your goods, including extra stock, regular stock, and things that are still being made. Don't just trust the labels on boxes or shelves. For example, if you run a bakery, count not only the loaves of bread on the shelves but also the flour and yeast in your storage.

Count from Warehouse to Sheet: Make sure your team follows this order:

• Start by counting what's actually on the shelves and in the storage areas. Physically see how many items are there.
• Then, compare what you counted to what your system says should be there. This ensures accuracy in your inventory records.
• Avoid the temptation to check your system first and then count the items. Doing it the other way around reduces the chances of mistakes. For instance, if your system says you have 100 bags of flour, but you only find 90 during the count, it alerts you to potential discrepancies or errors in the system.
• Stocktaking can be exhausting, so plan regular breaks to keep everyone fresh and focused. This ensures that mistakes are minimized and accuracy is maintained throughout the process.

After the Count

Value Inventory: Once you have your counts, it's time to determine the total value of your inventory. This involves assessing how much each item is worth based on its quantity and price. For example, if you counted 50 bags of sugar and each bag costs $5, then the total value of sugar inventory is $250.

Double-Check: Before finalizing your counts, it's essential to double-check for accuracy. The more times you verify your counts, the more confident you can be that everything is correct. This step helps prevent errors and ensures that your inventory records are as accurate as possible.

Update Your System: After confirming the accuracy of your counts, update your inventory system with the new information. This ensures that your records reflect the actual quantities of items on hand.

Reorder and Analyze: Review the results of your stocktake to identify any items that are running low and need to be reordered. Additionally, analyze any discrepancies between your physical counts and your system's records. This helps identify potential issues such as theft, miscounts, or inaccuracies in your inventory management processes. For example, if your system shows 100 units of a product, but your count reveals only 80 units, it prompts further investigation to determine the cause of the discrepancy.

What is Stock Control?

It's easy to think that stuffing your warehouse full of stock is the best way to meet customer demand. However, taking the easy route isn't always the smartest or most cost-effective option.

Balancing the right amount of stock on hand can be tricky, especially when there's a lot to keep track of. Plus, stock isn't static-it's constantly moving through the retail supply chain. But don't worry! There are plenty of ways to make smart decisions about stock control to keep your e-commerce business running smoothly and meet customer demand consistently.

In this article, we'll explore the importance of stock control, common methods used in e-commerce, and some handy tips to help you manage stock levels effectively. Let's dive in!

Stock control, also known as inventory control, is all about managing how much stuff you have in your warehouse. The goal is to keep just the right amount of stock to meet customer needs without spending too much on storage.

Different Methods for Stock Control

While it's hard to predict exactly how much stock you'll need in the future, some common methods can help you make better guesses. These methods are all about finding the right balance of stock to have on hand and when to reorder more.

Economic Order Quantity (EOQ): This method helps you figure out the best quantity to order from your manufacturer to minimize costs and make the most of your warehouse space. It helps you decide how much to order, how much safety stock to keep, and when to place orders. The calculation considers things like storage costs, how much you sell each year, and the cost of placing an order.

When you get stock control right, it helps you save money on logistics and ensures you always have enough stuff on hand. To do it well, you need tools and data to help you predict how much stock you'll need and when.

Dealing with Stock Discrepancies

Any time there's a difference between what you think you have in stock and what you actually have, it's a problem for your business-even if it turns out you have more than you thought. Stock discrepancies can signal bigger issues in your inventory control that could be really bad if ignored. Plus, they mean you're making decisions based on incorrect information.

When you find a discrepancy, the first step is figuring out why it happened. It might be a simple mistake, like putting something in the wrong place or typing the wrong number into the computer. Or it could be a bigger problem, like theft or issues with your suppliers.

Once you know what caused the problem, you can take steps to fix it. This might mean changing how you do things, getting new software, or adding extra security measures. Then, update your inventory records with the correct information to solve the problem.

Planning Ahead

Now that you've dealt with the discrepancy, it's time to make sure you learn from the experience. Take a close look at how you manage your inventory to see if there are ways you can do it better. And while you might not want to think about the next stocktake just yet, it's worth taking note of any problems or improvements you can make to ensure it runs smoother next time. Below are a few of the approaches that can be implemented.

• Vendor-Managed Inventory (VMI)
  With VMI, you let someone else handle ordering and restocking your inventory. The vendor takes care of managing the inventory and the risks that come with it. You pay for the stock only after it's sold, and any unsold stock goes back to the vendor. This method lets you worry less about managing inventory yourself.
• Just-in-Time (JIT)
  JIT means ordering just enough stock to meet customer demand and quickly ordering more when needed for the next batch of orders. It's all about reducing inventory costs, increasing efficiency, and minimizing waste by only buying what you know will sell soon. However it requires accurate demand forecasting and real-time access to stock levels to avoid running out of stock.
• FIFO (First In, First Out)
  With FIFO, you sell the oldest inventory first. This makes it simple to calculate costs and the value of inventory, even if supplier prices change. Batches with the oldest dates are picked and sold first. While FIFO doesn't affect the cost of goods sold at the end of the year, it can lead to accounting inaccuracies and doesn't offer tax benefits.

Key Differences Between Stocktaking and Stock Control

This table simplifies the comparison between stocktaking and stock control, highlighting key differences in their definitions, purposes, approaches, and methods.