The end of financial year in retail is quite similar to the end of a regular year, except instead of celebrating with fireworks, merriment and good cheer, it’s celebrated with a comprehensive stocktake of the entire inventory of your business to find discrepancies between your stock records and actual stock on hand.
Sounds exciting, right?
Okay, so maybe not New Year’s Eve exciting, but hang in there as we walk you through the fantastic benefits of performing a regular stocktake of your inventory, and the different ways you can tackle the process so you can enjoy a relatively stress-free end of financial year.
Stocktake is good business
Whether you’re counting stock in colossal warehouses across multiple locations, or facing the proverbial ‘out-the-back’, performing accurate and regular stocktake can greatly improve your bottom line.
Finding inconsistencies between your stock count and stock records is highly common if not to be expected, regardless of the size of your business. One of the obvious reasons that stock can go missing is due to theft, either through customers shoplifting or unfortunately, employee theft. While eradicating shoplifting altogether would be near impossible, if your stocktake uncovers that a significant portion of your stock is simply unaccounted for, it might indicate a need to review your security procedures and implement more stringent measures to discourage theft from your store.
Discrepancies in your stocktake numbers can also occur due to damaged stock that has been badly transported or stored incorrectly, or additionally stock that has been poorly recorded during the send-out and return process. This becomes a big issue when you are trying to make financial predictions and decisions for your business based on incorrect data.
Through determining why the figures aren’t adding up at stocktake time, you can implement strategies to prevent these mistakes occurring again in the future – whether it be repairing the broken shelving that led to the stock being damaged, or identifying staff members that need training on how to process returns and deliveries. With the right information to hand, you can make better decisions around stock ordering and accurate financial predictions for your business.
Choosing your stocktake alter ego
Whether you’re gearing up for the once-a-year-as-legally-mandated stocktake, or you regularly perform stocktake to keep your business goals in check, the best way to conduct a consistently successful stocktake is to plan ahead. While by no means exhaustive, we’ve outlined the strategies of four common stocktake personalities to give you an idea of which might best reflect your business’ needs.
1 – The Excel Spreadsheet
This is the no frills stocktaker, who will walk into the store room armed with their pen, a clipboard and a whole lot of patience. This approach traditionally involves performing a physical count of all the stock on hand, recording the tally on paper during counting, and then manually entering the results into a spreadsheet.
This strategy can work well enough for very small businesses without a large amount of inventory, such as an independent jeweller, a boutique clothing store, or any business that doesn’t use barcodes or radio frequency identification (RFID) for their products. It can however, be a slow and cumbersome process, and the high margin for human error means that miscounts are common and extra time is usually required to perform a recount.
If you’re an Excel Spreadsheet-er, there are a number of measures you can take to ensure the disruption to your business during stocktake is minimal, beginning with making sure you roster adequate staff to help you with the task. If the stocktake count is taking place outside of the regular roster times, your staff should have plenty of warning ahead of time so they can plan for the changed hours. Similarly, if you are planning to close your store early to perform the count, customers should be notified well in advance to avoid disappointment.
It’s essential that you begin with a clear working space before the count, and clear idea of how you are going to proceed – this might mean labelling boxes, colour coding or bagging up similar items – anything that will minimise the possibility of a miscount.
2 – The Finger on the Trigger
This seasoned stocktaker has one hand on the barcode gun, and the other hand on a coathanger (probably). Bringing in the scanner greatly speeds up the stocktaking process, as the stocktaker only needs to aim at the barcode and through the magic of light and lines all the product information can be captured and recorded. Once every item has been scanned, stock can be compared with the details that exist in the digital POS system to find any potential discrepancies.
Due to the greater accuracy in product description together with an increase in speed, this strategy is popular in small to medium sized businesses that have a moderate amount of stock to count. However, as this approach still requires that each individual item be scanned, it’s not really scalable where larger amounts of stock are concerned. The possibility for double scanning or errors between the scanning lists and the POS data also impact the reliability of this stocktaking method – even on smaller scales.
The general rule of thumb when it comes to being a successful Barcode Scanning stocktaker is to ‘divide and conquer’ – and there are two ways to go about this. The first is through dividing your stock into categories or brands, and running separate counts of these in the lead up to stocktake in a process known as cycle counting. For example, a clothes shop might count all the t-shirts one day, jeans the next day and so forth until they have counted everything.
The second way is to divide your staff, divvy up the store room space and provide extra scanners so everybody can work at once. It might also be helpful to provide staff with a map of the store room divide beforehand so that everybody has a clear visual idea of how things are going to run. Dividing the scanning task significantly reduces the time burden of the stocktake, making it easier to address any potential discrepancies with your POS records.
3 – The Pro
This stocktaker stares EOFY in the face and doesn’t bat an eyelid. The Pro has been using cloud based Inventory Management Software (IMS) that integrates seamlessly with their digital POS to keep an ongoing track of their inventory throughout the year. They may even be using RFID tags on their products, allowing them to scan and locate multiple items at once from almost 100m away without needing to be in the line-of-sight of the tag. When it comes to stocktake, The Pro Stocktaker is left unfazed by warehouses and storerooms that would send a chill down many a retail workers spine.
Through using a cloud based inventory management system, stock can be easily and instantly tracked across multiple location points, from the store to the warehouse, to online shop. Using an RFID scanner, the stocktaker can rapidly count stock on site, while the IMS makes note of what might be there on consignment, already sold, or destined to be returned to the supplier. The integrated capability of this approach to stocktake makes it perfect for any sized business, but especially one that is managing a large amount of stock, or operating across multiple platforms and locations.
With EOFY stocktake aside, a good cloud-based IMS is a great investment for any business through providing regular and accurate data and reporting on your inventory all year round. Some IMS solutions even include features such as an automatic purchase order when stock is running low, or customised alerts for expiry dates or big delivery days.
4 – The Invisible Man
Last but by no means least, we have the Invisible Stocktaker, who is absent from the stocktake altogether through the very real magic of outsourcing. Hiring a stocktake servicing company to run your stocktake seems like the ideal solution – and indeed it has become a popular option for many big franchise companies. However, it is not without its significant drawbacks.
The biggest issue from the outset is the large price tag that comes with an outsourced stocktake team, making it inaccessible to businesses that are working with a finite budget. If your business does have the resources to hire a stocktake services company, while saving you time, there is no guarantee that the company will do a better or even equal job to what you and your employees could do.
Without the in-depth knowledge and familiarity with your products, there is a greater potential for oversights leading to inaccurate counts. For example, the difference between the coral blouse and the peach blouse that you could spot from a mile away might be far less perceptible to somebody who hasn’t worked in women’s retail.
Choosing a stocktake services company can be a bit like roulette – you might get a fantastic team that efficiently does a thorough and accurate stocktake providing you with great insights and reports, or you might get an average team that misses the mark by a long shot. As with most things, the best way to minimise the risk of outsourcing to a company that is going to fall short of expectation is through doing your research before making a call.
Sit back, relax….and start getting ready for next year
With the stocktake done and the numbers in, the challenging part is over and it’s almost time to relax – but first, strike while the iron is hot and make sure you get the most out of all your hard work. It’s important to use the data from your stocktake to review and change procedural inefficiencies, as well as updating and balancing the inventory in your point of sale system. It is also the perfect time to do a product performance review of your stock while you have all of the facts and figures under the spotlight.
While everything is fresh, it is also a great time to reflect on what worked and what didn’t work with your stocktake, and make a note of anything that could make next year’s stocktake easier. If you found this year’s stocktake stressful, now would be an excellent time to get set up with an Inventory Management System, so that when next year rolls around you will be ready to rumble.
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