What are the Differences Between Stocktaking and Stock Checking

A lot has been discussed about inventory management, but it still isn’t complete without discussing stocktaking and stock checking. Stocktaking or stock counting is the process of manually checking the records of the inventory that your business currently has on hand. It’s an integral part of your business that impacts your inventory management, sales, and purchases. 

Stocktaking is more than just stock management. It’s all about taking the record of products in an inventory, and products that are running out of stock. Quite similarly, stock checking is the process of verifying stock levels and the quantity on hand.

The inventory stock of a company can be managed via stocktaking and stock checking. In this article, you shall learn about the difference between stocktaking and stock checking, the methods followed in both processes and the pros and cons associated with them. 

An Overview of Stocktake

As mentioned before, stocktaking involves manually counting all the goods that form a part of the inventory. This is why it is also known as stock counting. Additionally, it also involves checking the condition of these products to determine whether they are fit to be sold. This process is crucial in making decisions related to the purchase and production of new goods.

What are the Methods of Stocktaking?

Here is a look at the various methods of stocktaking:

• Period Stock Count: Periodic stocktaking can be done on a monthly, quarterly basis, or half-yearly basis to check the entire inventory stock. This method keeps you updated with the stock available and the costs of the goods sold. Errors cannot go unnoticed for a long period with this method. Any kind of discrepancy can be identified and addressed timely if you carry out periodic stocktaking.
• Perpetual Stock Count: With this method, stocktaking is done continuously throughout the year for each item available in the inventory. This may involve stocktaking of different business areas at different times or the entire business continually throughout the year. It is a continuous process that is managed with the use of barcodes, RFID, and other such tools that help keep track of the inventory. This helps identify discrepancies immediately and leaves little scope for error.
• Validation of Stockouts: This method of stock validation is done when a few particular items are out of stock or levels of stock are very low. Stock-out validation is not needed if the stocktaking processes are managed properly at regular intervals around the year.
• Annual Evaluation: Annual stocktaking is completed once a year to confirm your gross profit margins, stock levels, and pricing strategy. Many businesses prefer having an annual stocktake in the last month of the financial year. It is necessary for generating annual stock reports. It is necessary to understand the gross profit margins and assess whether the pricing strategy is satisfactory or not. However, an annual evaluation alone cannot ensure good control over the inventory; a monthly stocktaking is also needed.  This helps address issues promptly.
• Accuracy Check: Accuracy Pick is the process of checking the picking of orders from a warehouse. The process keeps a check on items that are going out or coming in against the invoice.
• Spot Check: Also known as line check, it is usually scheduled beforehand. However, it may be an impromptu or random check at times. Businesses that suspect malpractices or theft going on in their premises often consider random spot checks. The process involves tallying the stocktakes in your software with the available inventory. Discrepancies between the two can be identified with a line check.

Pros and Cons of Stocktaking

Let us begin by understanding the pros of stocktaking:

• It provides complete information about the available inventory.
• It enables better warehouse management.
• Precise information about the inventory helps in predicting future customers. demands, which in turn helps in better business planning.
• It helps in generating financial reports.
• It helps identify discrepancies occurring because of theft or loss of stock.

Let us now take a look at the cons of stocktake:

• Stocktaking can be a tedious and time-consuming task, especially for businesses that have a huge inventory.
• As it involves substantial time, it can prevent you from investing enough time and effort in other business-related tasks.
• There is a possibility of human error when it comes to manual counting of stocks. Some items may be left unnoticed while others may be counted multiple times leading to discrepancies.
• Error may even occur while recording the quantity of items in the system when done manually. However, the scope of such errors can be reduced by incorporating technology.
• If not carried out efficiently, stocktaking may cause delays in dispatch and can lead to dissatisfaction among customers.

A Brief about Stock Checking

Stock checking takes a smaller subset of inventory into account in comparison to stocktaking. The process involves verifying inventory levels for a particular item or a group of items. It is done to ensure adequate stock levels are maintained to meet the consumer demand. Stock checking is carried out frequently because it involves dealing with a lesser amount of inventory at a time.

What are the Methods of Stock Checking?

• Checking All Incoming Stocks: The most important part of stock checking is verifying the items as they are received. You should check all the incoming inventory and orders well from your supplier.
• Validating Stock Levels: To escape out-of-stock situations, you should validate stock levels and forecast the amount of time you need to maintain the minimum stock level.
• Monitoring of Stock Levels: You should always check your stock in real-time to forecast the revenue and losses.
• ABC Analysis: ABC analysis is used to prioritize your inventory items based on their value, quality, and demand.
• Tracking Expiry Dates: If you check the expiry date of products, you can clear the stock before it gets outdated.

All these are done for one purpose to make sure that the company can meet the inventory demand whenever required.

Pros and Cons of Stock Checking

Here is a look at the pros of stock checking:

• Stock checking enables keeping a check on different categories of products to ensure that the inventory levels are adequate to meet the customer demand.
• It allows businesses to make informed decisions related to restocking inventory.
• It helps in making demand forecasts, thereby lowering the risk of stockouts.
• Businesses do not have to face the problem of overstocking if stock checking is done efficiently.

Let us now take a look at the cons of stock checking:

• As these checks are carried out on particular item categories such as those that are in demand or high-value, they do not provide information about the complete inventory.
• Discrepancies associated with less valuable items may occur.
• Even though the process is carried out in smaller subsets of stock, it may still appear to be humungous.
• As the process is carried out frequently there is a chance of causing damage to the goods. There is also a chance of putting the items in the wrong place; thereby, causing slowing down the warehouse operations.
• The possibility of human errors cannot be ruled out in stock checking either.

What is the Difference Between Stocktaking and Stock Checking?

Although stocktaking and stock checking are about calculating the inventory stock, the main objective is different. Stocktake meaning, checking of the quantity and condition of the inventory stocks. It is about ensuring that the inventory is in good condition and meets the demands of the customers. Stock checking is the process of systematically checking the quantity of the inventory. It gives the ability to understand the quality of stocks that a company currently has on hand. This helps determine whether a company will meet the required production number and the demand of the customers. 

Both processes are equally important for a company. There is also a difference in the frequency levels of stocktaking and stock checking, depending on the company’s production quantity. The volume of the finished products can be conducted either monthly, weekly, or daily.

But it has a significant impact on a company’s stocktaking and stock checking procedures. The smaller firm prefers stocktaking products on a daily or weekly basis. In comparison, the more prominent firms prefer manufacturing done either on a quarterly or annual basis. However, stock checking should be done almost continuously.

Both processes give you a fair idea of the amount of stock in your inventory, depending on the sales volume. It is good to get the stocks checked daily. This will help meet your customer demands, and you will always be prepared for it. The problems can be identified immediately if the stocks are checked daily.

Businesses must learn the art of striking a balance between stocktaking and stock checking to benefit from both these essential inventory management methods. Doing so can help enhance inventory accuracy by offering extensive visibility over the available inventory and enabling better control. With this information, you are better equipped to predict inventory requirements and plan your purchases. 

Why Should You Employ Stock and Inventory Software?

There is always a risk of human error when the process of stock checking or stocktaking is carried out manually. This can hamper the smooth functioning of your business and cause dissatisfaction among customers. This is why more and more businesses are opting for inventory software to handle these as well as other tasks related to inventory management. Let us take a closer look at how this software helps with stocktaking and stock checking:

1. Lowers the Scope of Error

Counting and verifying the stock manually can be prone to human errors. This issue can be dealt with by automating these tasks through reliable inventory software.

2. Eases Inventory Tracking

With the integration of barcode scanning and RFID tags, inventory software eases the process of inventory tracking. You can easily track your inventory across the supply chain through this software.

3. Restock Timely

Inventory software provides real-time information about inventory levels and movement. You can use this data to forecast stock demand and make informed decisions related to purchase and production. Thus, you do not run out of stock and are equipped to meet customer demands at all times.  

4. Minimise Wastage

Advanced inventory software provides a detailed overview of the items in your inventory. They enable you to find out which products are about to expire so you can sell them first or put them up for sale to minimise wastage. Likewise, you may discard expired goods to free up space.

5. Integration with Asset Management and Other Software

Advanced inventory management software can be integrated with other software like lease accounting, asset management, and finance systems to name a few. This can help streamline various processes and enhance efficiency and productivity. 

Conclusion

The process of inventory checking or stocktaking is crucial for any eCommerce company that requires managing inventory irrespective of its size. By matching the inventory requirements to the quantity and quality standard, companies can adjust their existing inventory records, detect discrepancies, and improve inventory management. Advanced inventory management software can be employed to streamline these processes and ensure seamless operation.

Shiprocket provides inventory management that you need once your operations become more complex to handle.