Each business whether small or big needs stock count. With the passage of time and technology reaching up to its heights, things have become comfortable with the introduction of the sophisticated inventory management system.
No matter how precise the inventory management system can be for the e-commerce website. The need for stocktaking remains. Before moving any further let’s strengthen up our knowledge about the “Stocktaking”.
A stocktake is a process of stock inventory management in which the inventory is counted, and the comparison is made between the inventory managed online to the physical inventory.
Any variation between the stock counts will be adjusted by adding the adjusting entries into the system(Like Quickbooks).
Stocktaking is one of the most common processes of the eCommerce industry. It should be done on regular basis as accurate inventory is needed to be maintained for the proper functioning of the sales channel.
But you must be thinking why do you need this?
Ideal Situation is (Total inventory – Stock Purchased = Stock Left).
But in real life, this may not be the case always, consider a scenario when your item gets damaged in transport or unsatisfactory condition for resale and theft of stock.
Rolling out an ample amount of time in the stocktaking may seem to be a bit irrelevant. But considering the advantages that it may procure are relatively high.
The inventory should be managed properly. The items that cannot be sold like product damaged or any miss happening that makes the product not sellable.
In order to compensate the losses, the purchased goods are sold on higher rates. The high cost of goods sold means more deductions against your total income from sales, reducing the sale margins.
Stocktaking allows you to audit the products which are sellable. Thus allowing you to frame up the tax structure well accordingly.
The untold reality of most business is that theft always affects them. Having an online store without any strong command over the physical stock always end up in the theft and corrupted staff.
Though removing these unwanted events from the system can be a tougher challenge. But Stocktaking can highlight these issues so that proper action can be taken to minimize the losses.
A regular stocktake will also help in uncovering the damaged stock, unprocessed or missing orders, and poor stock control practices.
Stocktaking allows the store owner to maintain the reports in which the real physical entity can be maintained back on the system. This will make the owner estimate the losses that have occurred and prevent the losses that may arise in the future.
Consider an example in which you have a product with a shorter shelf life. Bulk product purchase is always profitable but purchasing goods with shorter shelf life in bulk is not a profitable business.
This may reduce the profit margin of the products. No Inventory Management system can provide the owner with the respective information. However, stocktaking will help you brief up the analysis of the losses that are occurring.
With the boon of the business, the sellers tend to add multiple products to the Store.
But in major, approx 80% of the sales come from 20% of your products. The other 80% of the stock will cost you money but sits on the shelves of your store or warehouse.
This will help store owner to control the stock. As store owner will be aware of which products are needed to be stocked in and which are not. The owner can send the supplier Purchase Orders of those respective products.
This will save vast piles of money and will have the following benefits of its own.
- Reduce the storage benefits that you require.
- Cut out the financial losses that the store owner may bear.
- Save the time in making space for the new products in your warehouses.
If you have a widespread business with branches reaching to the online and offline business, management of the products and the orders can be quite a difficult task.
With many software like the Point Of Sales for different platforms( Like Magento, Opencart, and WooCommerce) managing the inventory can be quite easy as the sales and the product quantity are updated in real time.
But consider the case when there are returns or exchange of the products or some products get damaged when putting on display.
What will happen then? Online you will have the stock inventory which will not be having the stock updates of the products which may get damaged or lost or theft.
Here when the stocktaking process comes into play, the real purchasable goods quantity gets back to the mainstream. The Inventory gets managed again with the product stock update.
This will make the store owner aware of the losses so that proper measures can be taken.
If you run a business which has stock stored in multiple warehouses. Managing the stock and holding the stock in multiple warehouses pose its own challenges.
Although there are some platforms like the Magento 2 which offers the Multi-Store Inventory which allows the inventory management for each channel which makes the job easy for product inventory management.
These extensions manage the major product inventory distribution over the various warehouses.
Consider a scenario in which there is a transfer of the goods from one warehouse to another. The stock quantity remains the same, but there will be an alteration in the respective warehouse quantity.
Stocktaking is the best for these scenarios but counting out the products in all the warehouses each time a transfer or alteration is done is not possible.
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