Stocktaking is the action or process of recording the amount of stock held by a business.  There are various techniques of stock taking and I have defined them below:

1. Periodic stock count

2. Continuous or perpetual stock count

3. Pick accuracy

4. Stock out validation

5. Annual stock take

1. Periodic Stock Count

Periodic stock taking can be monthly, quarterly or half yearly checking of the entire stock over one or two days dependent on the amount of stock. The method and process followed is similar to an annual stock take i.e. all items of physical stock are counted and recorded on stock sheets or scanned and then compared with the stock validation file.

While inexpensive items may be checked once a year, expensive items or stock with sell by dates should be checked more regularly.

2. Continuous, Perpetual Stock Count

With this system stocktaking is done throughout the year as per a pre-determined plan of action. A-items may be counted monthly, B-items counted weekly and C-items counted daily. This means that a perpetual stock counting record for each item is maintained showing all transactions so that validations can be completed.

Investigations with regard to any discrepancies can be spread over the year and therefore correct comprehensive analysis can be achieved. Year-end accounts can also be prepared expeditiously if continuous validation is fulfilled as per a pre-determined plan.

There should be minimal or no impact on the operations of any stores as counting and validation is completed throughout the year based on perpetual stock validation files. Any checks can be completed on a regular basis of perpetual stock reports against the stock validation file and anomalies can be identified quickly.

3. Pick Accuracy

Pick accuracy are checks that a business makes at the time of receiving stock from suppliers and/or while issuing items to store/customer. This is normally completed by picking orders going out to customers or within a warehouse a cage is normally identified.  This is where an invoice is present so that checks can be completed on the items going out or coming in against the invoice.

4. Stock Out Validation

This method of stores stock validation is completed when a particular item is out of stock or levels of stock are incredibly low.  This type of validation is generally done by in-house staff. The stock out is recorded, reordered and reasons why the stock out has happened are identified to ensure the issue is not repeated.

5. Annual Stock Taking

When periodical stock taking or continuous stock validation is not undertaken then an annual stock take is essential.  Annual stock taking is completed once a year. In certain instances the warehouse or store may be closed for a few days or the stock count held out of working hours.  In other places the receipts and invoices will be suspended until the stock take is over.  As with the periodic stock take all items of physical stock are counted and recorded on stock sheets or scanned and then compared with the stock validation file

Whichever stocktaking method you decide is best for you stocktaking will provide the following crucial information for your business

• Determines how well your business is operating
• Confirms your gross profit
• Pinpoints if you have any stock problems, i.e. theft
• Aids you with your pricing strategy
• Provides an accurate account of the stock you hold
• Highlights specific good and bad product sales performance
• Identifies how to reduce stock levels and improve cash flow