The Ecommerce Workshop

Before you begin your stocktake, you must ensure that everything in your operation is in order. To facilitate this, we would usually advise you follow the basic steps indicated below.

• Check that all Sales, Invoices, Transfer and Wastage habe been entered and updated for the period

This step is important as you will need to ensure that once the counting begins, all stock movement and committed stock levels are updated accurately and they must remain static for the period of the stocktake cycle. You can only proceed once this has been completed.

• Print stocktake sheets and load items not counted into the count file as a zero count

Using your accountancy/stock management software, you can now print out your current stock position. Once this has been completed, it is vital that no stock movement takes place as this will invalidate any count of that particular item and will create a discrepancy within the variance report thus compromising the final audit submission.

Our next guide will take you through the final ‘physical steps’ you should take to complete a stocktake, including count recording, variance management and preparation for data input.

Over the coming weeks, we shall be removing the mystery of stocktaking.

In this part we shall explain what a stock take is and what methods can be used.

What is a stocktake?
A stocktake is the physical counting (as opposed to a system reconcile process) of all the stock that is in a store in your stockroom, warehouse or indeed anywhere your business holds stock at a particular time. These actual stock figures are then compared to the stock records for the period of time covered by the stocktake. This could be monthly, quarterly or annually. Conducting a stocktake allows retailers such as yourself to accurately record what stock is actually held within the business. Stocktakes are can also be required by law at specific taxation time.

There are three main methods that can be used to run a stocktake:

1: A complete stocktake, where every single item in the warehouse is counted. Complete stocktakes are generally undertaken annually or bi-annually (twice yearly).

2: A cyclical (perpetual) stocktake, where only part of the stock is counted at any one time, but these counts are carried out on a regular, scheduled basis, eg the chill department of a supermarket may carry out a stocktake on a weekly basis because it carries a large range of stock with a limited shelf life. This is also referred to as a P.I. or perpetual inventory.

3; Systemic spot checks, where, in a particular area of the store, stock is checked for discrepancies.

For a stocktake to be of benefit, it must be carried out accurately and in a timely manner. Stocktakes can be carried out using stock sheets or tally sheets (where stock numbers are recorded manually), or by using electronic recording equipment. These are generally portable electronic hand held units that can record barcodes, prices and quantities such as RDF’s.

Some large retailers use a system called Electronic Data Interchange (EDI), which links Point of Sale (POS) equipment with computers which record sales as they are made and calculates new stock levels with each sale. When the predetermined minimum stock level is reached for a particular stock item, an order for new stock is automatically generated by the system

Any discrepancies in the stock should be recorded and reported to the relevant person. Totals should be signed and then recorded so that accurate crosschecking of the actual stock counts against the recorded stock records can be conducted.When the actual stock figures do not agree with the recorded stock (or book stock) figures then this can indicate inventory control problems.

Stock holding issues can arise for many reasons including:

a) Stock counting errors
b) Inaccurate stock recording at delivery, eg invoice errors, short deliveries, mistakes in recording, damaged stock, unordered stock and returns
c) Mistakes when reconciling the recorded stock records
d) Mistakes in recording discounts, markdowns or waste
e) Theft by customers, staff or vendors (officially known as ’shrinkage’)

Different compnaies will have different policies concerning stocktaking. In a controlled environment, the stocktaking process should be managed within the organsations Operational Procedures and be compliant with the minimum, external audit requirements.

Our next part of the stocktaking process will cover the initial steps to take when preparing for an annual stocktake.

This collection of articles is presented to The Ecommerce Workshop by D.Jephcote BSc. He has over 20 years experience in logistics and inventory management with companies such as Screwfix Direct and Hays. He has carried out numerous stocktakes and successfully implemented Perpetual Inventory’s that complied with external audit requirements.

He now runs a successful web design company where he assists online retailers not only look professional but also manage the back office effectively.

One of the most important factors in any business is of course inventory control. Tied into this is the mandatory requirement of stocktaking.

With over 20 years experience in logisitics and distribution, numerous stock takes under our belts and successful compliance to external audit requirements, we are going to guide you on how to complete a painless stock take.

Coming the End of April 2008, all you ever needed to know about stock taking will be in one place…here at The Ecommerce Workshop.

Key Points will be covered including start-up principles, reference recording, perpetual and static inventory practises and much more.

This collection will be reserved for our members (but it is 100% FREE so do not worry) from Part 2 onwards, so if you are a member, bookmark this page now and look forward to a stress free stock taking future. Not a member, worry not, in the box to your right called META, you will see a REGISTER link. Click on that, join with a valid email and your done. No fuss, no charges.

We keep business simple…after all, isn’t that how it should be?

Part 1 - What is a stocktake is now online.

Part 2 (members only) -  The iniital steps of a stocktake. Coming soon.