We are experienced pro’s when it comes to stocktaking techniques and how to get a stocktake done efficiently, effectively and accurately. That’s why we have put together this short guide below containing all sorts of best practices to ensure your stock taking goes smoothly.

Some good practices for you to consider and integrate into your stocktaking process are:

Produce A Stocktaking Plan
  • Schedule your stocktakes to take place on days and times when your stores and warehouses are likely to be quite or closed. For extensive stocktakes pick a date and time when sales flow is generally slow or alternatively, plan an out of hours stocktake.
  • Earmark the staff required for the stocktake well in advance of the scheduled date and make sure their time is allocated in your rota system.
  • Ensure that selected staff are fully trained and conversant with the processes, tools and technology you will be using during the stocktake.
  • If you are planning to rent stocktaking scanners and or software, contact your supplier and pre-book your rental. Most suppliers who rent scanners and stocktaking software require a reasonable period of notice to schedule, prepare and deliver your equipment. It is advisable to book your rental 4-6 weeks in advance to be sure that the scanning devices and software you need are available.
  • If you are planning to use an external agency to perform the stocktake, contact them well in advance of the planned dates so that they can start their part of the planning process with you.
  • Communicate your planned stocktake dates and times to all parties that will be involved in your stocktaking process. This will include area and store managers and all head office staff responsible for stock control, warehouse operations, finance, web, mail and telephone ordering departments.
Prepare the Location

Prepare the location where the stock is to be counted a week or so before the scheduled date. A well prepared clean and tidy site will dramatically reduce the time taken to count your stock, produce more accurate results and make life much easier all round for the appointed stocktaking team.

Guidelines for Preparing the Stocktaking Location
  1. Check your products and ensure that they are correctly labelled. Replace any worn or unreadable labels with new ones.
  2. Make sure barcode labels are readable and easily accessible for scanning using a barcode scanner or Portable Data Capture device (PDT, PDC, HHT or other Mobile Scanning Device).
  3. If you are not using barcodes, use labels that clearly describe the product by name, style or description.
  4. Check that all of your stock is where it should be such as in the correct department shelf, rail, row, display, bin number, store room and so on.
  5. Create a separate area for holding stock to be processed from web and retail sales returns
  6. Create an “awaiting dispatch” Here you would store stock to be dispatched such as web, telephone and mail order items, stock transfers to other locations and returns to suppliers
  7. Create a “goods-in” area for holding stock that may arrive while the stocktake is in progress. This would typically hold stock that arrived direct from suppliers and transfers from other locations or your warehouse.
  8. Create a quarantine area for holding damaged or faulty stock that needs to be processed.
  9. Create a “stock picked” area for holding stock that has been picked ready for dispatch.
  10. Make sure that your stock rooms are neat, tidy and safe and that all the stock is easily accessible.
  11. Ideally all labels should be “front facing” to avoid the need to move stock around during the count.
  12. Where stock is stored in boxes or cartons, check the contents to ensure that they match the description and quantity shown on the box or carton label. All boxes and cartons should have a label on the outside clearly stating their contents.
  13. Check all those odd areas where stock may have been put or “left for later” or simply forgotten about such as under counters, under stairs, in doorways. Move the stock to its correct location.
  14. Put stock that is committed (such as stock on a layaway or part of a customer order) in a separate area and make sure this area is clearly labelled. Check that the stock allocated is still required and if not cancel the layaway or order and return the item to stock.
  15. If you supply stock on approval (commonly called an Appro), make sure that your records are current and up to date. Stock out on Appro needs to be accounted for during a stock take. Make sure that all “bin” locations you use to hold stock items are labelled showing the “bin” number, barcode or other labelling convention you may be using.
Create A Stocktaking Map

Map out the stocktake location and break it down into manageable counting blocks. The smaller the blocks the more accurate the stock count is likely to be. Typically, an area containing say 30-40 items is a good size to work with. Draw a map showing the physical location of these counting blocks within the store or warehouse.

Allocate unique letters or numbers to each of these counting blocks and record them on your stocktaking map.

Your stocktaking map should have separate areas for goods-in, goods out, picked, layaway rails, faulty and damaged goods, and stock returns awaiting processing.

Allocate a counting area for stock that is out on approval.

Stock rooms should ideally be broken down into manageable counting blocks such as shelves and rows. Create your map references to include an identifier for each store room and sub section within it.

If you are stocktaking during trading hours you will need to take account of any stock sold from an area that has not been counted. Designate an area on your map for each point where retail sales are processed. Sales staff will need to keep a record of stock sold prior to the count.

Leave sufficient space on your stocktaking map to record key information about the count in each area. This might typically include:

  1. Who the stock count was allocated to
  2. How many stock items were counted
  3. A unique batch code if a barcode scanning device is being used for the count and a unique identifier for the scanning device (such as device name or number)
  4. Date and time the stock count was completed.
  5. Number of items scanned and number of items manually counted as a cross check.
  6. Barcode or name of first item and last item counted
  7. A note of any batches deleted during the stock count.

Your stocktaking map provides you with a control and management tool to administer the stocktake effectively, ensuring every area is counted, checked and signed off. It also allows you to monitor how well the count is going and is a great point of reference if you need to recount areas for any reason.

Your stocktaking map can also be used to allocate sections of scanning to the individuals in your counting teams and is a good means of keeping your eye on how they are progressing with the count.


Mark Up the Stocktake Counting Areas

Now that you have completed the stocktake map on paper and assigned numbers/labels to each area/block of stock to be counted, label up the counting areas as recorded on the stocktake map. Place your counting area labels in a prominent position and make sure they are clearly visible.

Make the labels are large enough for the counting team to “tick off” and record the number of items counted when they have completed the area. This is very important for control purposes and essential if you are trading in the store during the count.

The stocktake team will normally record the area label and number of items counted in that area on the stocktaking map for cross reference purposes.


Know Your Starting Point.

Ideally you want to get an “expected stock position” before you start the stocktake. This will allow you to look at variances between expected and the physical count. The variances provide an excellent means for you to identify incorrect counts and specific areas where there are stock shrinkages, vulnerable to theft and there are weaknesses in your stock control processes and procedures.

If you are using a retail/inventory management system, ERP, accounting system or e-commerce database to keep track of you stock, make sure that all transactional movements have been processed and taken account of before you start counting. This will include retail sales and returns, web orders- returns, order cancellations, stock transfers between locations, deliveries and supplier returns.

Create a back-up of your stock control database after all the pre-stocktake transactional movements have been processed. It is also advisable to generate a complete list of your inventory items detailing the expected quantity, value and product descriptors such as barcode, product name and description, department, category, supplier and so on. Save this generated list as a document for printing or electronically as an Excel or CSV file.

If you do not have an electronic record of your inventory items or the expected stock position, the stocktake will be limited to just counting what you have. We highly recommend that the minimum you should do prior to the stocktake is to use an excel spreadsheet to make an inventory list, ideally showing product barcode, cost price and description. You can then use this list for adding in the counted quantities by stock item and value your stock. This list can then be used as a reference point for future stocktakes.


Using a Portable Data Capture Unit (PDC)

How you count your stock will be determined by the methods and tools you use. You may be counting your stock manually using tick sheets and other related tools or using electronic means.

We do not cover manual methods of stocktaking in this article but concentrate on the use of electronic scanning devices commonly known as Portable Data Terminals (PDTs), Hand Held Terminals (HTTs), Mobile Barcode Scanners or Portable Data Capture units (PDCs)

Assuming that you are using portable data capture units for scanning and counting your stock,

Prepare and Test the Barcode Scanners and Software

  • Make sure that your scanning devices are fully charged and working correctly before you start. Charge all your devices overnight ready for use the next day.
  • Carry out a few test scans and make sure that the scanning software you are using is working as it should and is set to scan your particular barcode format.
  • If you are transmitting your scanned data via the internet using Wi-Fi, Mobile or fixed network connection to the device, test out your connections before you start counting.
  • Mark-up each scanning device with a unique name or number.
  • Use the stocktake scanning application to set the name or number of the location where you are counting (most stocktaking software has this function built-in).
  • Familiarise your stocktaking team with the scanning device hardware and software before they start counting and satisfy yourself that they are proficient in its use.
  • Make sure that the scanning device power charges and or cradles are readily at hand for recharging the devices during the stocktake and for downloading stocktake results.

Assign Scanning Tasks

Using you pre-prepared stocktaking map, allocate specific areas to members of the stocktaking team. Make a note on the map of who has been allocated the stock scanning and counting tasks and which scanning device they will be using.

Counting and Scanning Your Stock Items

Firstly, we recommend that the counting and scanning is done in pairs. One person to perform the scanning and the other to perform a manual count of the items. Have a note pad available for jotting down details of the scan and the manual count.

  • Check that your scanner has sufficient battery charge to complete the count
  • Count the allocated scan area from left to right or top to bottom.
  • Make a note of the first item scanned and the last item scanned.
  • If you are scanning box or cartons labels, check that the items match in terms of barcode, product description and quantity. Do not assume that the labels are correct. Where there is a mismatch, scan and count the items individually. Mark the box or carton as labelled incorrectly.
  • If the stocktake scanning software allows you to count using stocktake “batches”, create a new stocktake batch for each area, make a note of the batch number and area number it corresponds to in your note book.
  • If your stocktaking software provides the facility, enter the scanning area code or number that matches the stocktake map
  • Scan the items in the area – make a note of the number of items scanned and the first/last barcode scanned – most stocktaking software provides has this facility.
  • Where you come across items where the label is missing or you are unable to scan the barcode, ask a member of the store staff to remove it to an area where is can be identified and labelled correctly. These items will need to be scanned and counted at the end of the stocktake as a separate count batch.
  • Manually count the number of items in the area and cross check against the number you scanned. Also, check the first and last item scanned. Delete the scanned batch if there are differences, create a new batch and count again. Make a note of the deleted batch in your note pad.
  • If the manual and scanned records match up, close the batch and commit it for processing.
  • Mark the scanning area label as completed and record on it the batch number and number of items counted. It is also helpful if you tick each item label with a red pen to indicate it has been counted.
  • Update the stocktake map records with the time completed, number of items scanned and batch number. Also make a note of any deleted batches.
  • Carry out the scan of an area in one hit if you can. This will minimise the chances of you loosing scanned data if the battery runs out or the scanning device switches off for any reason while you are on a break.
  • Prevent retail staff and customers form removing or adding stock to the scanning area while you are counting.
  • If you are counting stock while the store is trading, inform the retail sales staff when you have finished scanning an area so that they can open the area for trade.


Dealing with Stock Movements During the Stocktake

 It was previously suggested that areas should be allocated on the stocktake map to take account of the various types of item movement that may occur during the stocktake. In the ideal world, the stock would be frozen for the period of the stocktake and there would be no movements from the expected starting position.  However, it is reasonable to assume some movements may take place and to have procedures in place to capture them. The following are guidelines for capturing and accounting for these movements.

Stock arriving at the location – stock may be sent directly to the location by a supplier or another location (commonly called inter-location transfers). This stock may not have been included in your opening expected stock position. Quarantine the stock in an area designated “Goods-In” until the stock check has been completed. This stock should be counted as a special batch at the end of the stocktake and considered for inclusion/exclusion in the overall count.

Customer Order Returns – items may arrive at the location as web order, mail order or telephone order returns. These may not have been accounted for in your expected starting stock position. Quarantine these in an “area called customer returns”. Do not process these returns until the end of the stocktake and make sure they are captured as a customer returns batch for inclusion/exclusion at the end of the stocktake.

Confirmed Customer orders – if you are selling on-line it is unlikely that you will want to suspend your e-commerce operations while stocktaking. You may have to pick and despatch stock for web orders while stocktaking to meet your quoted delivery times and promises. If you take stock and put it aside to cover a web-telephone or mail order before the stock area has been counted, make a note of the barcode, quantity picked and description. Put any picked items in an area designated “picked ready for despatch” do not include items in this area in the stock count.

When picked items are ready for dispatch, move them to an area called “Customer Orders for Dispatch”. Do not include items in this area in the stock count.

At the end of the stocktake, create a special batch to record the items picked for customer orders. Scan or manually enter barcode details and quantities for the items picked. This batch can then be considered for inclusion/exclusion in the overall stocktake count.

Retail Sales and Returns – if you open for trading during the stocktake you need to take account of items that maybe sold prior to an area being counted, customers moving stock around, returning items or leaving stock at the sales point. Some points to note:

  • Make a note of all items that are sold before an area is counted – this would include barcode, quantity and description or alternatively keep the barcode labels in a box or your cash draw.
  • If customers bring items to the sales point that they do not purchase, ensure that these items a promptly returned to the correct area to be included in the count.
  • Keep an eye on customers as they move around the store to make sure they are not moving stock from one area to another.
  • Keep all retail returns in a separate area for processing after the stocktake has finished.
  • At the end of the stocktake, create unique batches for scanning and counting a) your list of retail sales and b) retail returns. These can be included /excluded in the final count analysis as necessary

Supplier Returns and Transfers Out – if at all possible avoid processing any new supplier returns and stock transfers to other locations or your warehouse during the stocktake.

Stock Put Aside for Identification -Relabelling

Inevitably, the stocktaking team will come across items that they cannot identify – labels are missing or barcodes will not scan. These items should be put aside in an area called “for identification” and would not be included in the count of the area they came from. While the stocktake is in progress, someone from your store or warehouse staff should be tasked with identifying and labelling these products. At the end of the stocktake, create a batch for scanning and counting these re-labelled products. Do not return relabelled products to their correct area until the stocktake has been closed off.

Shop Floor Replenishments – avoid replenishing your trading areas with stock from your store rooms until the stocktake has been completed. If you must replenish, do not take stock from a stock room until it has been counted and only replenish areas that have been counted.


Processing and Analysis of the Stocktake Result
This is a major part of the stocktaking process and ideally you will be using stocktake analysis and reporting software for this task.

Most modern inventory management systems have some level of stocktake management software built-in to assist with this task. If you do not currently have access to stocktake management software or the software you are using falls short of requirements, it is worth considering renting or buying specialist stocktake software from us. Using spreadsheets to consolidate and analyse your count can be very time consuming and prone to error.

Use stocktake software, it will knock hours off the processing time, produce more reliable and accurate results and help you complete the stocktake must faster

Verify Your Batch Counts

  • Check that all of the areas on your stocktaking map have been scanned, counted and signed off by the stocktake administrator.
  • Check that you have the correct number of batches, that the batch records have the correct number of items and the batch identifiers match your stocktaking map.
  • If batches are missing from your stock count processing system you will need to rescan the area(s) corresponding to the missing batches.
  • When you are satisfied that you have all the batches ready for processing you can get stuck into the business of analysing the results

The batches on your scanning devices will normally be stored as individual CSV or text files. These will have been copied (uploaded) into your stocktaking software or you will have copied the individual files from your scanning device onto your PC or laptop for manual processing.

If the stocktake software you use allows, verify that all the barcodes scanned in all of the batches correspond to barcodes that make up your known inventory list. Track down and correct any barcodes that do not match or exclude them from the count as exceptions.

When you have verified the scan batches, the counts in each batch and excluded bad scans the next step is to consolidate the batches to create am item lists that shows the total counted across all of the batches. This can be done manually, in spreadsheets or using stocktake software such as ours.


Analysis of Variances

Assuming that you are working from an expected stock position (what your system reports that you have in stock prior to the stocktake), often referred to as the system quantity, compare the counted quantities with the system quantities by item to provide you with a list of variances.

Once you have the stocktake variances you can start to look at them, the most significant first, to identify areas that may need to be recounted, counts that need to be reviewed or to identify potential weaknesses in your stock control processes and procedures for corrective action in the future.

Complete any recounts and make any necessary adjustments to the count and update your variances list. You are now ready to commit the stocktake.


Updating Your System Stock

Having completed the stocktake variances assessment and made appropriate adjustments to the count you can update you stock control records with the results of the stocktake. You can either adjust the existing system quantities (most stocktaking software provides this capability) or simply replace the current system quantities with stock the  count.

Keep a copy of the final stocktake count records, these maybe required by your accountants- auditors or for further checking after the update. Preferably, save an electronic copy of the stocktake results and produce a paper copy.

Print off or save electronically item by item details of the opening stock position shown in your retail/inventory management, accounting or other system as soon as the stocktake count has been committed.

Let everyone involved in the stocktake know that it is complete and that they can resume normal operations and practices.


Stocktaking Software and Tools

If you are using external stocktaking agencies (Stocktakers) they would normally take care of scanning devices, stocktake software and other specialist tools, you would mainly be involved in preparing the stock counting environment and areas.

If you are currently conducting you own stocktakes manually using pen and paper, excel spreadsheets or other method, we highly recommend you consider renting or purchasing professional stocktaking software and scanning hardware. You will save endless counting hours, complete the task quicker with less disruption to your trading hours and produce more accurate results.

Stocktake scanning devices are readily available at very reasonable prices nowadays making the prospect of renting a very economical alternative to manual counting.  We would recommend CODEO as a great source of renting scanning devices http://www.codeo.co.uk. They can offer devices to meet most needs and environments at reasonable prices.

Stocktaking software to operate on your scanning devices and to assist you process and analyse the results can also be rented along with the scanning hardware. I-stocktake is a good source for end to end stocktaking software that you can use independently or in conjunction with your retail, inventory, accounting or other stock control system. I-stocktake software can be rented on a week by week basis and provides excellent value for money.

If you are using existing legacy stocktaking scanning hardware and software it is worth looking at replacing it with a modern solution that can be used over the internet using Wi-Fi or mobile technology. Solutions ours (as used by the Regatta Group for stocktakes at their retail concessions) can be used to significantly enhance or replace your existing solutions. If you need any further advice on a stock taking solution for your business then get in touch today!