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?
Why are Stocktakes 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:
Running out of stock on a product;
Finding yourself with an overflowing stock room that is tying up your cash;
Landing with a pile of dead stock which is no longer usable;
Having a load of unchecked damaged goods on your hand; and
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.
Benefits of the Stocktakes
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:
1. Keep your inventory up to date
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.
2. Uncover stock room issues
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.
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.
What is the Difference Between Stock and Inventory?
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:
Stock – These are the items that you sell to customers, mostly finished goods. But, if you sell any of your raw materials, components, or subassemblies, then this is classified as stock too.
Inventory – This encompasses everything else, your raw materials inventoryand MRO inventory, but still includes your sellable items too.
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 that you sell to the customers.
Now that’s cleared up, the next chapter should make sense…
Managing Inventory to Make the Most of Your Stocktake
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?
Periodic Inventory – Updating inventory at fixed time intervals by physically counting stock levels.
Perpetual Inventory – The continuous real-time updating of inventory, usually achieved with an inventory management system.
You need to look for stocktaking software that can keep your products and materials in sync with your production and sales.
Katana is a perpetual inventory management solution that weaves your sales, manufacturing, and inventory into one seamless workflow.
Best of all, if you’re still using spreadsheets for inventory management, you can finish your initial stocktake and then upload the spreadsheets directly onto the software.
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:
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 out, no need to touch an Excel spreadsheet again.
You can adjust your stock directly on Katana and let the automation process take over.
How Often Should Stocktake be Done?
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.
There are two general approaches:
The first is to do a huge annual stocktake, which could involve shutting down your operations and checking everything in 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 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.
How Do You Do a Stocktake?
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:
Before the Count
Pause sales and purchases to avoid incoming and outgoing inventory disrupting your stocktake;
Remove unnecessary distractions by either shutting down operations or performing the stocktake after hours; and
Set aside time to resolve discrepancies and solve issues.
During the Count
Stocktake all your sellable inventory, even if it’s classed as safety stock, cycle stock;
Make you and your staff are recording stock levels on the shelf and comparing that to figures in your inventory management system; and
Take breaks, this task is log and arduous, and it’s easy to make mistakes when overworking yourself.
After the Count
Value your inventory correctly, double-check that valuation, and once you’re happy, upload everything to your inventory management system;
Replenish stock items that are running low and analyze the results of your stocktake; and
Investigate discrepancies and identify what’s making them occur.
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.
How to Improve Your Stocktaking?
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:
Allocate One Counter
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.
Regular stock takes
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:
Underperforming products; and
The best reorder point for items.
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-Based Inventory Management
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.
Stocktaking at the Next Level with Inventory Management Software
Katana isn’t just made to help you optimize your stocktaking.
It’s an inventory management system designed to integrate and synchronize your entire order fulfillment process. That means from one single dashboard, you can manage your:
Katana uses perpetual inventory management, so you can track your inventory movements and perform stock takes in real-time.
Don’t lose track of another item on your supply chain or have to perform as many stocktakes to determine where capital is being tied up.
Inventory management software like Katana also allows you to improve your business at different levels, be that with:
A better overview of your business with the MRP dashboard;
The introduction of barcode scanning management on your shop floor; or
The API allows you to customize your own integration with other business apps.