The Dead Stock Survival Guide for Small Manufacturers
Dead stock can cost businesses as much as 11% of their revenue. Here we help ambitious manufacturers identify and stop dead stock inventory from building.

Getting stocktaking methods right can be a time-consuming process. Thankfully there are ways to make it easier and get the most out of your dreaded stocktake.
Stocktaking is the process of physically checking stock levels for each of the products and materials you sell to make sure that your data is up to date and accurate.
It’s important to have a fine grasp of your stock management 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 without identifying your stock discrepancy. The stocktaking procedure can be a minefield to navigate without the right tools and a well-thought-out strategy.
That’s why we have explored the world of stocktaking, including how to do a stocktake, the benefits, and the best techniques for maintaining healthy inventory levels.
Discover everything you need to know about stocktaking in this management guide.
The definition of stocktaking, otherwise known as stock counting or inventory checking, is the act of physically getting verification of the quantities and examining the condition of items held.
Two reasons manufacturers may need to perform a stock take are to provide an audit of existing stock or uncover stock discrepancy information. However, stock taking is a major contributing factor to your inventory control, especially as a manufacturer, as your business function optimally relies on successfully managing not just stock but different types of inventory. Now you know what is stocktake, why are they important?
It doesn’t take a lot of self-reflection to realize that stocktaking is a necessary step in taking care of your manufacturing business.
After all, your inventory — your raw material, components, and subassemblies — is the make-up of everything you use to make and sell your products. Without a strong foundation, you may be setting yourself up to fail. Just imagine that you don’t prioritize your stock management over an extended period.
You might well end up:
And these elements can add up fast to create a monster that 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. But hey, not everything is doom and gloom. What you should really be keeping your eyes on are the awesome benefits that come with having a solid stocktaking procedure in place.
Once you start accurately managing your stocktakes, the fruits of your upcoming labor will become clearer.
Here are just some of the many benefits you can expect to find:
The importance of accurate data cannot be understated.
Maintaining correct inventory data is useful for manufacturing your products. It will also help you make sure you have finished goods in stock waiting to be delivered to customers, and you’re not carrying negative inventory. 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. You can save your business on carrying costs and keep your inventory at optimal efficiency.
There are so many elements that 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, most of these problems are just going to be one-off cases that are simply the reality of business. But there’s no doubt that optimizing maintenance and security measures can assure you don’t lose any more stock than you have to.
We’re talking humidifiers, advanced locks, handling procedures, that kind of thing.
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.
If you’re reading this article so far, but you’re scratching your head in confusion, that’s a fair response.
It is confusing.
So, to quickly clarify, the difference between stock and inventory comes down to what it is you actually sell to customers:
So, if you read inventory management, that’s how you handle all these items in your business. But, your stock refers only to the items you sell to the customers. Now that’s cleared up, the next chapter should make sense.
Traditionally, manufacturers and even retailers used periodic inventory management for stocktaking.
This is where you perform stock checks at intervals that could be daily, weekly, or monthly. However, this needs to be done visually and can be extremely time-consuming, and depending on how many items you have in your warehouses, this task can take up to an entire day. This disadvantage to periodic inventory management is big enough to drive modern, forward-thinking manufacturers over to perpetual inventory management, but what’s the difference?
You need to look for stocktaking software that can keep your products and materials in sync with your production and sales.
The reality is that there is no standard for how many times you should be doing stock takes, but the truth boils down to:
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. There are two general approaches:
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 ideal to aim for.
PRO TIP: The process becomes a lot simpler once you have yourself an MRP software to keep track of your inventory. Especially with software, like Katana, where you can upload your inventory data with a simple inventory spreadsheet template.
Now, don’t be shocked — just because you aim for stocktakes regularly 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 ongoing. 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 and time for your stocktaking:
The brilliant thing about getting this right is that it will likely improve the flow of your shop floor because everyone on the team is going to be more aware of what is moving in and out of the stockroom once a stocktake has been completed.
Now you know everything you need to know about stocktaking and even the steps to follow while performing these duties.
So, what’s the best way to go about improving this hefty task? Thankfully some techniques and tools can help you perform this:
Considering the amount of information that needs to be gathered and how important it is to avoid making mistakes, it’s best to assign one person to the task. Yes, it might seem unfair as it’s a big task, but it helps avoid mistakes with multiple employees miscommunicating with each other.
The longer stocktaking is put off, the harder it is to possibly remedy any issues that might be found when you do it eventually. Regular stock takes will allow you to identify:
Physically counting material takes a considerable amount of time. That’s why introducing a barcode scanning system will help you to speed up the process and reduce the chance of making a mistake while doing stock counts.
Cloud inventory management software allows you and your staff to monitor stock levels on the shop floor or away from the office. All you need to have is an internet connection. The real-time responsiveness of cloud software allows you to keep on top of stock movements and keep up-to-date information on your inventory.
Katana is a perpetual inventory management solution that weaves your sales, manufacturing, and inventory into one seamless workflow.
The stock you keep in Katana is updated automatically in real-time. For many manufacturing businesses, it’s common practice to perform regular stock counts to record stock levels correctly. These counts can come in the form of a stock take, inventory, or cycle count.
To start a stocktake in Katana, you’ll first need to create a stocktake document for all item variants that have any quantity in stock.
Count the items and update the quantity for each item variant or batch row. You can use a barcode scanner to identify and count item variants or batches, and the amount counted will be updated automatically. Once the stocktake status is set as counted, you’ll see a full stocktake report and will be able to review the discrepancies between the quantity in stock and counted quantity.
While your stocktaking is underway, no stock adjustments will be made before the stocktake status is set to as Completed.
You can still delete rows that need to be left out from the stock adjustment to recount them. Once done, change the status to Completed. This will automatically create a stock adjustment and update the quantity in stock.