Avoiding Retail Stocktaking Mistakes: A Casual Guide for Retailers

Posted on June 13, 2024
As we approach Eid, a peak season for retailers, it’s essential to prepare for accurate and efficient stocktakes. Retail stocktaking mistakes can derail even the best-laid plans, but with years of experience helping retailers streamline their processes, I’ve identified key pitfalls to avoid. Today, I’m going to share these insights with you.

Setting the Stage for Successful Stocktaking 

Hiring a third-party auditor is like hiring a pro chef for a big dinner—they bring the expertise, but you still need to set the table. They will have to come prepared with the right number of trained staff, modern technology, and robust systems to guarantee agility and precision in counting your stock. Stocktaking is crucial but often chaotic, especially during peak seasons. Partnering with third-party auditors can help, but only if you avoid these common mistakes. 

Common Stocktaking Mistakes Retailers Make

Lack of Preparation , Information is power. 

When discussing common retail stocktaking mistakes, it’s crucial to highlight the impact of poor communication and scheduling issues. These issues often lead to rushed and inaccurate counts, affecting overall inventory accuracy.

  • Pre-Stock Take Meeting: You’re the owner of the house, and you’re the expert in your SOPs. A quick team huddle beforehand is essential to explain the process, highlight areas of focus, and answer any questions. 
  • Clear Communication: Sharing the counting schedule and designated areas with staff keeps everyone organized and avoids confusion. 
Let’s Get Physical (Inventory, That Is): 
  • Declutter Champions: Encourage staff to be “declutter champions” in the weeks leading up to the stock take. A clean and organized stockroom with minimal clutter makes counting a breeze. 
  • Packing it Up: For items that can’t be counted (damages, returns in progress), having a designated “non-countable” area clearly marked saves time and avoids confusion. 
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Poor Communication (It Takes Two to Tango) 

Imagine that in a clothing store, the auditor doesn’t know your preferred order of counting sections. This miscommunication can lead to missed items or duplicate counts. Clear communication between you and the auditor is crucial to align on procedures and priorities. 

Scheduling Issues 

Conducting stocktakes during busy periods or not allocating enough time is like trying to have a quiet conversation at a rock concert. Ensure your stocktake is scheduled during a less busy time to avoid rushed and inaccurate counts. 

Environmental Factors 

Counting items in a dimly lit, cramped storage area of a home goods store is a recipe for errors. Ensure good lighting, accessible stock locations, and a comfortable environment for accurate counts. 

Moving Items During Counts

In a bookstore, moving stacks of books during a count is like moving the finish line in a race – it throws everything off. Keep items stationary to avoid miscounts. 

Detailed Discussions on Stocktaking Issues

Too Many Products Not in Stock on Hand (SOH)  Imagine scanning a barcode on a unique wine bottle in a specialty store that the system doesn’t recognize – it feels like playing a game with no rules. Unrecorded stock or outdated item masters can lead to such problems, and third-party auditors can help identify and rectify these discrepancies. 

Deep Dive into Miscommunications 

Think of the auditor as a guest in your house – they know how to cook, but you know where the utensils are kept. Align on best practices and specific store workflows to prevent confusion. 

Preparing for a Third-Party Auditor Stock Take 

Prepping for an auditor in a large supermarket is like prepping for a big exam – the more organized you are, the better the results. Organize stock, provide clear instructions, and maybe even order some food for the team to keep morale high. 

Handling Discrepancies in Inventory 

Finding a huge gap in inventory in a fashion store is like discovering a plot twist in a mystery novel – it’s unexpected and needs thorough investigation. Investigate and address large gaps in inventory promptly. 
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The Hard Part: Post-Stock Take Investigation 

Once the stock take is finished, the real challenge begins – the investigation part. If not conducted properly, it can be a nightmare. Here’s the deal: 
  • Prioritize the Big Issues: Focus on the highest discrepancies first. Don’t get lost in the weeds by addressing every minor issue. 
  • Act Fast: You need to wrap up the investigation quickly, ideally by the next day. The longer you wait, the more unreliable your inventory data becomes as new items come in or go out. 
  • Minimize Manual Changes: Avoid manual manipulation of data between the stocktake and what you push to the ERP system. If you must make changes, log and track them with clear explanations.

Engaging Examples 

  • Real-Life Scenarios: Picture a busy electronics store trying to count stock during a new product launch – the chaos is real. Or imagine a hardware store with an auditor not knowing which aisles to count first, leading to missed items. 
  • Impact on Business: Mistakes in stocktaking can lead to inaccurate inventory, overstocking, or stockouts, directly affecting your bottom line. 
Tips for Improvement 

Enhancing Your Stocktaking Process

Stocktaking can be a daunting task, but avoiding these common mistakes can make the process smoother and more accurate. Share your own experiences and tips – we’re all in this together! .Understanding and mitigating retail stocktaking mistakes can significantly improve operational efficiency and inventory management. By addressing preparation, communication, and environmental factors, retailers can streamline their stocktake processes and ensure more accurate inventory records.
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Frequently Asked Questions

Retail stocktakes should ideally be conducted at least once a year to ensure accuracy in inventory records. However, some retailers may benefit from more frequent stocktakes during peak seasons or based on their business volume.

Common tools for retail stocktaking include barcode scanners, inventory management software, RFID technology, and manual counting methods. These tools help streamline the process and improve accuracy.

When discrepancies are found during stocktaking, retailers should investigate the root cause promptly. This involves comparing physical counts with recorded data, checking for misplaced items, and verifying transactions. Addressing discrepancies promptly helps maintain accurate inventory levels.

Inaccurate stocktaking can lead to overstocking, understocking, increased operational costs, poor customer service due to stockouts, and financial losses. It also affects decision-making processes, such as ordering and forecasting.

Retailers can improve their stocktaking processes by implementing cycle counting, where sections of inventory are counted continuously throughout the year. Additionally, investing in staff training, using advanced inventory management software, and conducting regular audits can enhance accuracy and efficiency.