Most of us are familiar with the phrase “take stock,” as in “I need to take stock of the situation.” But what does the term really mean? In fact, its origins lie in the retail industry, where it literally means figuring out how much stock a business has—whether that’s widgets in a warehouse or chewing gum for sale at the cash register.
Even in the modern world of ecommerce, basic stock counting is a crucial part of successfully managinginventory levels. Businesses large and small keep regular records of their existing stock levels, whether they track them by hand or with sophisticated cloud softwaresystems. Here’s an explanation of a stock take and guidance for your own stock management efforts.
What is a stock take?
A stock take is the process of physically counting and recording the quantity of products a retailer has on hand at a specific point in time. Also known as inventory tracking or stock counting, a stock take also verifies its results against the records in an inventory management system to ensure accuracy and identify any stock discrepancies. A business owner can then use any stock discrepancy information to complete a deeper stock audit, reconciling records until the company knows the exact quantities of items held in its facilities.
How to perform a stock take
- Prepare and plan
- Divide and organize your stock
- Begin your count
- Verify and reconcile
- Adjust your counts and report totals
- Refine for continuous improvement
Performing a stock take is essential for maintaining the most accurate inventory records. Here’s a step-by-step guide you can use when performing your next stock take:
1. Prepare and plan
Start by scheduling the stock take during a quieter period (before peak holiday shopping season, for example) to minimize disruptions to daily operations. Gather necessary supplies, such as bar code scanners, inventory sheets, and labels. If you’re using cloud-based inventory software, you’ll need an internet connection. Assign roles and responsibilities to your team and provide clear instructions on accurate counting methods, whether you’re using bar code scanners or logging items by hand.
2. Divide and organize your stock
Divide the stock into manageable sections or areas, using shelves, aisles, or product categories. Ensure the items are properly organized with clear labeling and easy access for counting purposes.
3. Begin your count
Progress to physically counting each item in the designated sections, using either tools like a bar code scanner or manual counts. Record counts accurately on inventory sheets or enter them directly into your inventory management system, noting any discrepancies or damaged items.
4. Verify and reconcile
Compare the physical counts with existing records in the inventory management system. Investigate and resolve discrepancies found between the physical count and the recorded inventory levels. Identify reasons for variances, such as theft, missing orders, errors in recording, or damaged goods.
5. Adjust your counts and report totals
Reconcile the totals in your inventory system to reflect the most up-to-date stock levels based on your count. Generate stock take reports detailing the count results, missing items, and actions taken for future reference and analysis.
6. Refine for continuous improvement
Use the insights gained from the stock take to improve inventory management processes. Implement better inventory tracking methods, address areas of high shrinkage or discrepancies, and refine stock-taking procedures for future accuracy. This continuous improvement helps you manage future inventory checking and add efficiency to your stock taking operations.
How often should you perform a stock take?
The frequency of your company’s stock takes will vary based on your industry and the types of goods you sell. For instance, businesses that sell perishable goods know that the threat of spoilage makes weekly stock takes important. By contrast, semi-annual stock takes may suffice for a business that sells office supplies.
Here are a few general guidelines for scheduling stock takes:
- Annual and semi-annual stock takes are common. Stock takes can be expensive, as they often pull workers away from their normal duties. Conducting regular stock takes on an annual or semi-annual basis lets you monitor operations at a relatively affordable price.
- High-demand items may require more frequent stock takes. For high-value items or products that move quickly, more frequent stock takes might be necessary. This helps reduce the risk of stockouts, and it may be an early detection mechanism against theft or other causes of retail shrinkage.
- Schedule stock takes before heavy sales periods. There’s likely a calendar date or specific point in the year when your sales tend to spike. Time your stock takes before those points so you’ll have enough safety stock to keep your customers happy.
- Just-in-time (JIT) inventory systems need more frequent stock taking. A just-in-time (JIT) inventory system involves having a steady stream of products arrive shortly before the stock sells out. Frequent stock takes will ensure your logistics operations are ready for the rapid turnarounds inherent in a JIT model.
Manage inventory from one back office
Shopify POS comes with tools to help you manage warehouse and store inventory in one place. Forecast demand, set low stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more.
Tips for improving stock taking
Use continuous monitoring systems
Continuous monitoring systems, like RFID (radio-frequency identification) technology or bar code systems, allow for real-time updates on inventory data, reducing the need for traditional, periodic stock takes. You’ll likely still need to use physical counts for inventory reconciliation, but the automated systems make tracking inventory on a minute-by-minute basis possible.
Implement cycle counting
For efficient inventory control, consider implementing cycle counting, a method where you count smaller portions of inventory regularly throughout the year instead of doing one massive stock take. This approach helps limit the unnecessary distractions that large-scale stock takes often cause.
Establish clear systems
Conduct each stock in the same way for data consistency. This includes using the same counting methods and setting a clear cutoff time for counting. If time is of the essence, prioritize counting finished goods that are ready for sale or products that have higher sales frequencies.
Stock take FAQ
What is the purpose of a stock take?
The purpose of a stock take is to verify and reconcile the actual physical inventory with the recorded inventory levels. This achieves two different things: It ensures accuracy in stock quantities for effective inventory control. It also can affect pricing decisions, since sales volume reveals the scope of customer demand.
What should be included in a stock take?
A stock take should include physically counting and recording the quantity of all items in inventory, verifying them against the recorded inventory levels, and noting any discrepancies or damaged goods for reconciliation and accuracy purposes. This process involves assessing finished goods, incoming purchases, production materials, and any piece of inventory connected to the sales process.
What is the difference between stock takes and cycle counts?
Stock takes involve a comprehensive and periodic assessment of the entire inventory, typically conducted annually or semi-annually, verifying against recorded levels, while cycle counts are smaller, ongoing, and more frequent inventory checks focused on specific sections or items. Cycle counts offer several benefits, starting with their ability to provide continuous inventory control without overly disrupting daily operations.
Are stock and inventory the same?
Yes, in most contexts, “stock” and “inventory” refer to the same thing: the goods or materials that a business holds for sale or use in its operations.
