How to Get Your Stocktake Method Right the First Time
Most of us take stock of our own lives on a daily basis.
Asking questions like, what have I achieved so far in life? What are my plans for the future? Why doesn’t my cat love me?
All totally confusing and also essential parts of our existence. Important to find answers to so that you can grow as an individual.
Now, similar questions can be applied to your product and material inventory. You want to know how much you have in the stockroom so you can plan for the future. Maybe not always on a daily basis, but certainly as often as you can.
But, when it comes to your product-making business, what is stocktaking?
Stocktaking is the process of physically checking inventory levels for each of your products and materials to make sure that your data is up to date.
And like those life-affirming questions, it is also important to have a fine grasp on your stock levels to make sure your business can grow.
Without knowing what you have and what you’re doing with your inventory levels, there’s no way you can run your business efficiently enough to nurture growth.
There are many caveats which come with this age-old procedure though, especially when you have to deal with raw material inventory management as well as finished products.
The stocktaking procedure can be a minefield to navigate without the right tools and a well-thought-out strategy to carry you through.
Thankfully though, there is a way...
Why are Stocktakes Necessary?
It doesn’t take a lot of self-reflection to realize that stocktaking is a necessary step in taking care of your product-making business. After all, it is the make-up of everything you use to make and sell your products.
Without a strong foundation, you might find yourself in sticky situations.
Just imagine that you leave your stock room to fend for itself over an extended period of time. You might well end up:
Running out of stock on a product, or the materials to make the product;
Finding yourself with an overflowing stock room which is tying up your cash and resources;
Landing with a pile of dead stock which is no longer usable;
Having a load of unchecked damaged goods on your hand; and
Losing sight of potentially beneficial inventory management practices.
And these elements can add up fast to create a monster which gets totally out of control. Imagine that your stock data is so out of sync with reality that you cannot fulfill orders on time without wasting huge resources on overstocking.
Sadly, this is a reality many businesses have to face, simply due to a lack of focus and attention on their stocktakes.
But hey, not everything is doom and gloom.
What you should really be keeping your eyes on are the awesome benefits which come with having a solid stocktaking procedure in place.
Benefits of the Stocktake
Alright, so we know what can go wrong, but what about if we get our stocktaking on the right track?
Well, this is where the fruits of your upcoming labor will become clearer.
Because the reality is that the advantages of good stocktaking practice are going to see a vast range of benefits across your business.
In fact, there are so many that we thought we might as well make a list for your painless consumption.
1. Keep your inventory up to date
The importance of accurate data cannot be understated. Maintaining correct inventory data is both useful for the manufacturing of your products as well as making sure you have products in stock for delivery.
Without it, your production planning may end up becoming obsolete, and even more sadly, your customers might not end up with their products being delivered on time.
Get it right though, and you can save your business on carrying costs and keep your inventory at optimal efficiency.
2. Uncover stock room issues
There are so many elements which can affect the products and materials which lay in your stockroom. Poor conditions, damp atmosphere, badly handled boxes, and even theft are just to name a few.
Of course, a lot of these problems are just going to be one-off cases which are simply a reality of business. But there’s no doubt that maintenance and security measures can be taken to make sure that you don’t lose any more stock than you have to.
We’re talking humidifiers, advanced locks, handling procedures, that kind of thing.
3. Improve your sales strategies
Nothing cleanses the soul like a good spring clean. And that’s basically what a stocktake does, except on an even more regular basis (we’ll get to the frequency later).
The main point here is that by constantly being in touch with your product stock you can make a strong visual connection between your sales figures and what’s happening behind the scenes.
It won’t take long to realize that one of your pet products is actually doing a lot worse than you thought when you see it on the same shelf week after week. The opportunity will then arise for you to adjust your sales and marketing efforts to suit the supply you already have in stock.
How Often Should Stocktake be Done?
This question of stocktake frequency is one which pops up in the mind of many a curious maker.
The reality is that there is no standard for how many times you should be doing stock takes, but the truth boils down to: the more stocktakes the merrier.
There are obvious limits to this mantra, but the point is that you want to have as many updates to your data as you can to ensure that you’re running at your maximum efficiency.
Now the process becomes a lot simpler once you have yourself an MRP software to keep track of your inventory. Especially with a software like Katana where you can upload your inventory data with a simple inventory spreadsheet template.
But the truth is that you still need to be stepping into your stock room and checking off your inventory physically to get an accurate picture.
There are two general approaches. The first is to do a huge annual stocktake, shutting down your operations and checking under every carpet with one fell swoop.
The second and frankly more beneficial is to be checking your stock regularly throughout the year. Potentially at weekly or monthly intervals.
It's going to be of much more use to be keeping your records consistently up to date unless your stock room is so tiny that discrepancies are immeasurably rare.
The exact interval is, of course, depending on the length of your product life cycles, but weekly checks are an ideal to aim for.
How Do You Do a Stocktake?
Now, don’t be shocked, just because you aim for stocktakes every week (or small intervals of your choosing) doesn’t mean you do everything at once.
In fact, this type of stocktaking, also known as cycle counting, is designed to keep your business running as the process is going on.
The trick is that you categorize your products into groups that are easy to identify together. They could, for example, be from the same collection, or simply be placed beside each other in a larger stockroom.
Then you can go through a different category at each interval, without interfering with your daily operations too much.
So, what is stock take process?
Well, it’s going to vary for every business, but you can follow these general steps once you have allocated the days for your stocktaking groups:
Prepare a list of products and materials that need checking;
Have one person ready to call out quantities and another to do the updating;
Go through your list one by one checking each box thoroughly for damaged/lost/missing good;
Update your list with the correct quantities, making notes on any issues;
Check through to make sure you have examined all the right inventory; and
Update your MRP software to reflect any changes.
Now that might seem simple enough to do on paper, and sure enough, after time it will be. But likely at first, you will find that some products are missed, and data is not being updated correctly.
Take the time to make sure you have a clear stocktaking process which keeps those involved focussed, motivated and ready to take discrepancies seriously.
The brilliant thing about getting this right is that it will likely improve the flow of your workshop because everyone on the team is going to be more aware of what is moving in and out of the stockroom.
Making the Most Out of Your Stocktake
It’s one thing to have an accurate and up-to-date inventory, but it’s a totally other to be able to use it to your advantage. After all, there’s not a whole lot of point in taking the time to implement stocktaking procedures if it isn’t affecting the overall efficiency of your business.
Now that’s where the real tools come in.
Because spreadsheets can only take you so far before they become a hindrance and nuisance in themselves.
You need to look for stocktaking software that can keep your products and materials in sync with your production and sales.
Katana is a solution which threads your sales, manufacturing, and inventory into one seamless workflow.
One of its awesome features is that you can mass edit your inventory in one go. That’s for both your products and materials.
So, for the initial stocktake you upload your spreadsheet data directly into the software and it can be used to feed into the rest of your product-making business.
From then on you can do future stocktakes directly on the Katana dashboard.
For that initial mass update, it's a simple two-step process.
Firstly, you download a template from Katana which already has your products and materials listed.
Go to “Settings”
Select “Data import” from the left-side menu
And download the template from the “Update stock levels and reorder points” section
You can then take this spreadsheet with you as you perform the stocktake.
The spreadsheet will look something like this:
You can now adjust the reorder points, stock value and stock levels. The next step is to upload the spreadsheet back onto Katana and let the software do the rest of the work. You will find that all of your inventory is up to date with the data you entered.
From here on in though, no need to touch an Excel spreadsheet again.
You can adjust your stock directly on Katana and make sure that your entire production schedule is up to date as a result.
Taking Your Stocktaking to the Next Level
Okay, so stocktaking is clearly a process which can have massive effects on the efficiency of your business. And if anything, it’s a great way to stay in touch with your products and get thinking about how stock is moving from workshop to customers' doorsteps.
It’s certainly not a simple procedure though. There are so many little gaps and cracks which can become apparent when doing consistent cycle counts of your stock.
The important thing is to take all of these issues, as opportunities rather than burdens. Because every gap you manage to fill will lead to a cleaner and smoother running business.
Now, we already got a little taste of what Katana can do for simplifying your stocktaking efforts. But the reality is that this is a solution that offers a lot more to the product-making business than just that.
Katana ties your sales, manufacturing, and inventory altogether on a single dashboard that has been designed for the maker’s eye.
Here are just a few of the awesome benefits it brings:
Manage your product and material inventory levels;
Move on from inefficient inventory Excel sheets;
Integrate with Shopify and other e-commerce channels;
Sync with accounting software like Quickbooks;
Use as a production planning software; and
Have your entire business workflow on a single dashboard.
Now, of course, no software is going to be able to completely eradicate the need for a physical stocktake.
But you can be sure that with the right tools you can simplify the process. That means you can spend less time on those existential inventory questions that keep you up all night, and spend more time growing your business.