Tips & Insights

What is Stock Checking?

Stock checking refers to the process of verifying and confirming the quantity and condition of stock held at any given time. It ensures that the actual physical stock matches the recorded inventory data. Stock checking can be part of a routine inventory control process, or it may be used to investigate discrepancies, prevent stockouts, and support efficient stock management.

There are various stocktaking techniques businesses can use, depending on their size, industry, and operational requirements. These are outlined below:

1. Periodic Stock Count

Periodic stocktaking involves checking all stock monthly, quarterly, or half-yearly—usually over one or two days depending on the volume. This process is similar to an annual stocktake: all physical items are counted and recorded, typically on stock sheets or scanned, and then compared with the stock validation file.

While low-cost or slow-moving items may only require an annual count, high-value items or products with expiration dates should be checked more frequently. This technique is useful for maintaining stock accuracy while minimizing disruption.

2. Continuous (Perpetual) Stock Count

In a continuous or perpetual stocktaking system, stock is counted throughout the year based on a pre-planned schedule. Items may be grouped into A, B, and C categories (e.g., A-items counted monthly, B-items weekly, C-items daily).

Each item has a perpetual record that tracks every stock movement, allowing for accurate and up-to-date stock validation. This method spreads investigations of discrepancies across the year and allows timely corrections. It also streamlines year-end account preparation.

Because stock is checked continuously, this technique minimises disruption to operations and enables regular comparison between perpetual stock reports and the stock validation file to identify anomalies quickly.

3. Pick Accuracy

Pick accuracy refers to checks performed when stock is received from suppliers or dispatched to customers. During this process, stock is validated against an invoice or order sheet.

For example, within a warehouse setting, a cage or section is used to hold items for dispatch. These are verified against the invoice to ensure accuracy. Ensuring pick accuracy helps reduce errors, avoid returns, and maintain customer satisfaction.

4. Stockout Validation

Stockout validation is performed when stock levels fall to zero or very low. This method is typically conducted by in-house staff. The stockout is recorded, the item is reordered, and the cause of the stockout is investigated—whether it’s due to poor forecasting, unexpected demand, or supplier delays.

Understanding stockout validation helps businesses prevent recurring issues, ensuring stock availability and better customer service.

5. Annual Stocktaking

If periodic stocktaking or continuous stock validation is not implemented, then an annual stocktake becomes essential. This method involves counting all stock once a year.

In many cases, warehouses or stores are closed temporarily, or stock movements (receipts and invoices) are suspended during the count. As with other methods, items are either manually recorded on stock sheets or scanned and then compared against the stock validation file.

Annual stocktakes help provide a full inventory snapshot for financial reporting and compliance.

Why Stocktaking Matters

Regardless of which stocktaking method you choose, effective stocktaking and stock checking provide essential insights for your business. It can:

• Determine how well your business is operating

• Confirm your gross profit

• Pinpoint stock problems, such as theft or mismanagement

• Support pricing strategy decisions

• Provide an accurate account of your current stock

• Highlight top-performing and underperforming products

• Help reduce excess stock and improve cash flow

In conclusion:
Stocktaking and stock checking are vital for efficient inventory control. Choosing the right stocktaking technique based on your operations will enhance accuracy, streamline audits, and drive better decision-making across your business.