Somehow, I doubt anyone in the world has been as involved in stocktakes as I have. Stocktaking is one of the best practices and a crucial process for any business in 2024. It involves physically counting your inventory to ensure your records match what you have on hand. This can be daunting, but it is the best way to control inventory. It is also your way of testing your inventory management system. For example, Excess Inventory, *Eating Away* at your profits in 2024, and checking your inventory data.
Why Inventory Management Matters
In today's dynamic market, real-time inventory visibility is essential for success.
Effective inventory management allows you to:
Stock management
Regular stocktaking helps you identify excess inventory and your inventory tracking and assess your current inventory control. For example, people often find "dead stock" just sitting there and holding their cash flow.
Improve Inventory Accuracy
Accurate inventory levels are the foundation for informed decision-making. Regular stocktaking ensures you have the right stock to meet customer demand.
Accounting requirements
A properly conducted stocktake is the best way to prove and justify your stock holding to the ATO. Estimates are always dubious to an auditor, and if the auditor feels that you do not have good inventory management techniques and stock keeping, they can make and use their estimates. I have seen this problem happen with clients that have used cyclic stocktakes. I have discussed this issue here.
Tips to get your stocktaking procedure going in 2024 going.
Preparation is Key
Thorough preparation is critical to a successful stocktake. Schedule your stocktake for a quiet time, organise your shop as much as you can before, and consider what people are best for getting faster and more accurate counting. Remember as well that:
-Stock counting tends to work faster if people are in teams, so consider dividing people into teams of two or three people; I find that two people to count and one to record the count makes an effective team.
-A stocktake is an excellent opportunity to check pricing, barcode, and product labels while counting.
-It is also an excellent opportunity to clean the shop.
-Plan how to split the task into blocks to keep your staff motivated and alert. We recommend that you divide your shop into manageable counting areas. Label each section clearly. You should aim for each area to be something that can be done in one to two hours max. This makes it easier to have regular breaks
-If you have a warehouse, make sure it is not missed. Often, it can be done on another day.
-Move stock as much as possible to the appropriate counting area. You want stocktake day to be as simple and fast as possible.
-You can take a few days as a stocktake can be done in more than one day.
-Sometimes, you cannot count but will have to use estimates.
Check your Technology
Modern inventory management software has revolutionised the stocktaking process. Our POS system integrates with stocktaking software, automates tasks, and streamlines the entire process, but make sure the setup you intend to use works. I have seen how frustrating it is for people to assemble their teams, start the stocktake, go to record stock levels, and discover something isn't working. Make sure your stocktaking software and equipment work now!
Test your equipment and verify it works. Confirm that the chargers and batteries are all fully operational and ready for use. It is also an ideal opportunity to familiarise yourself again with their operation.
If you can use laptops or, better still, PDTs, both will be real-time savers as these can move around the shop rather than going to the items to count. If you have a laptop, ensure it works with our POS Software.
Review how stocktakes work.
Develop a Systematic Counting Procedure
Establish a clear and consistent method for counting your inventory. This could involve counting by sections or categories to ensure no stock is missed or double-counted. In Australia, it is generally considered easier to count from left to right—bottom to top. Make this a rule before you start, and make sure everyone knows this in advance.
-As you count, prepare place markers to mark counted areas to avoid missing or double-counting sections.
Common stock issues
These problems you need to address before you start the stocktake:
-Have a problem holding area where problem items that appear while doing a stocktake can be moved too, allowing you to move on in the stocktake and not be held up. You are trying to streamline the process.
-Move as many problem items into this holding area as possible before you begin.
-Review the types of inventory you have. For example, put all laybys, consignment items, or items waiting for dispatch in separate holding areas. Later, you must check with your accountant about how they want these items handled.
Conclusion
These tips will help you make a successful stocktake. If I missed something, please let me know.
We are reviewing our complete stocktaking guide, so give us a few days to review it. We will also release some other guides on specialised issues in stocktaking. These guides will equip you with the latest knowledge to improve your bottom line.
Happy stocktaking!
