In today’s fast-paced environment, it’s more important than ever to have an accurate inventory count. According to a study by Auburn University’s RFID Lab, inventory accuracy is as low as 65%. For product sellers, inventory inaccuracy has wide-ranging effects on your business, leading to unexpected stockouts and missed sales opportunities.
For the most accurate inventory count, you’ll need a two-pronged approach: regular stocktaking (at least once a year) and consistently monitoring your stock levels using a robust inventory management system.
This guide will help you understand the importance of stocktaking, explore various stocktake methods, and learn how to leverage technology for more efficient inventory management.
Stocktaking, also known as stock counting, stock checking, and taking inventory, is a physical count of all of a company’s on-hand inventory. Please note, parts you’ve planned to manufacture internally and products you’ve ordered or sold aren’t counted during stocktaking.
Many businesses have to count inventory in multiple locations, such as warehouses, on shelves in brick-and-mortar stores, and even samples in the trunk of a salesperson’s vehicle.
Companies perform stocktakes at regular intervals to:
The frequency of stocktakes can vary from daily to yearly, depending on your products and business needs. At minimum, an annual stocktake is necessary for accounting purposes.
Stocktakes are an excellent opportunity to improve business operations. They help you track value, reduce losses, optimize stock levels, and plan for the future.
Stocktakes tell you exactly how much working capital you have tied up in inventory, which affects your budgeting, forecasting, seasonal demand planning, and accounting. Knowing your inventory’s value, you can better plan business processes like expansions, financing, product launches, and marketing campaigns.
Accurate and complete stocktakes help you spot issues like missing stock and barcode errors before they become large problems.
Identifying overstocked and underselling products helps you adjust your marketing approach, such as using promotional pricing and earmarking these products for SKU rationalization.
Inventoro by Cin7 makes minimizing overstock easy. Its AI-powered forecasting helps you reduce stock levels by 40% while increasing revenue. Having less stock saves you time during stocktakes and frees up cash for other business operations.
According to a report by Avery Dennison, businesses throw out $163 billion of inventory annually. Stocktakes help you proactively spot overstock, quality issues, and soon-to-expire products.
That said, relying solely on physical stocktakes to prevent waste isn’t advisable, especially if tools in your tech stack can do a better job. Cin7’s warehouse management module includes batch and expiration tracking to easily monitor your products, reduce wastage, and improve quality for customers.
Forecasts rely heavily on the base data used. If your data isn’t accurate, forecasts can multiply the problems over time and produce unreliable results.
Verified accurate stocktake reports are the starting point for better forecasting. Stocktakes give you the best starting point for your forecasting tools, like Inventoro by Cin7.
Accurate, insightful forecasting reduces your purchasing expenditure while meeting customer demand.
The type of stocktake you perform depends on your specific needs. Some product sellers feel they only need a yearly count, while others opt for an inventory cycle count. Here’s a guide to each type:
A yearly stocktake is common practice and is often required for accounting and tax purposes. It does require a substantial amount of time, and you may need to close your stores and suspend warehouse operations during the stocktake.
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Periodic stocktakes occur at regular intervals, such as weekly, monthly, or quarterly, and are useful for small businesses as they provide store owners with more frequent inventory data than an annual count.
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Inventory spot checks are more sporadic than other stocktakes. They’re often done in response to theft or other discrepancy concerns.
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With this method, sometimes called inventory cycle counting, a stocktaker’s job is never really done. You count levels of different stock types throughout the year to spread out the workload as part of a perpetual inventory system.
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If your software or a physical inspection shows that certain products are out of stock (or almost), a stockout validation confirms actual stock levels at that time.
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To simplify your stocktakes while saving tons of time and money, get an inventory management system like Cin7 Core or Omni. Here’s how Cin7 helps you count everything from the stockroom to the shopfloor:
Whether your stocktake is periodic or yearly, preparation is key. With Cin7’s warehouse management module, you can add guided walk paths and dedicated warehouse zones, helping you better organize your warehouse and get counts done more quickly and accurately.
For your best chance of success, use an experienced (or well-trained) team and give them well-planned tasks and goals.
While you’ll still benefit from your phone calculator as well as some pens, clipboards, and sticky notes, technology will speed up your count. Barcode scanners help you get through stocktakes quickly and ensure the right product is being counted.
Cin7 works with ScanSKU and a variety of other systems, helping you speed up inventory counts. In fact, Cin7 customers report that our inventory management solutions reduce the length of stocktakes from weeks to mere days.
As an inventory management solution, Cin7 prioritizes accuracy, so you don’t need to second-guess your inventory levels after a stocktake. With full confidence in your inventory management system’s accuracy, you can reduce time-consuming stocktakes like spot checks and focus on growing your business.
If you handle manufacturing in-house, you can use Cin7 to track both finished products and raw materials for product manufacturing. With an accurate bill of materials and the ability to count inventory levels and revise them from one place, Cin7 takes the sting out of raw material stocktakes
Cin7 helps you track inventory in all your locations. With these tracking capabilities, you won’t accidentally skip a section of your warehouse or double-count items.
After your stocktake, you can use Cin7’s high-level reporting features and apply the results of your stocktake to various other areas of your business, such as accounting and sales.
No one enjoys stocktakes, but they don’t have to be stressful.
If you prepare well in advance, organize your product offerings, and leverage inventory management software like Cin7, you’ll get quicker results and the tools to put those results to use.
Want a shortcut to a superb stocktake? Request a demo today to see how Cin7 can improve your stocktaking process.
