Part of the business support the Malcolm Scott Consultants team provides is offering guidance on retail and restaurant management, and this month we have focusing on the importance of stocktaking and stock control to support processes, productivity and profit.

By Andrew Burton

Inventory or stocktaking is a process of calculating the amount of stock you have, be it retail food, drinks and sundries such as bags or takeaway cups, and creating a report to record the quantity of stock and its value, and to provide a comparison against previous inventories, and enable you to evaluate your anticipated stock using accounts purchase information and epos data.

Many retail businesses only need to do a stock take once or twice a year, perhaps because the level of stock they have does not change much, or maybe because operators think the job takes too long. But failing to stocktake at all can slow reaction times to controlling gross profit losses, and prevent businesses from improving control of allowances by identifying what is actually in stock to avoid excessive re-ordering, thereby reducing waste and providing instant results.

The major factor with stocktaking is that it provides absolute clarity on what a business has in stock and information to work with – enabling it to keep an accurate track of physical stock, what has been sold, and what has not. It is all about comparing the physical stock to what the report charts, and identifying any discrepancies.

This in turn allows a business to calculate wastage and allowances and provides a complete picture of what has gone through the till, what has been wasted, ultimately creating what is commonly known as KNOWN LOSS and UNKNOWN LOSS. No business wants UNKNOWN LOSS and by taking stock this enables businesses to identify issues earlier and deal with them!

Stocktaking also highlights any significant discrepancies between what a business thinks it has, and what it actually has, and can bring attention to problems including theft and shrinkage issues.

For many businesses, inputting stock on retail data is essential and I am a big believer that this is right for the businesses we work with, however, often restaurant epos data isn’t cost effective.  The time it takes to do this in the same format as retail stock just doesn’t add up.  However, through manual stocktakes it still can give you the data you need.  Cost prices and retail prices should all be used on epos systems, however calculating stock value is essential at key times.  Often corporates work to weekly stocktakes in restaurants, however when we consider other catering outlets I personally feel that stocktaking monthly, or at the very least quarterly, is something restaurants and cafes need to do. With regard to retail, half yearly stocktakes are essential in my view to support the financial reporting and also to help identify issues.

Another aspects is spot checking. If you book stop in on your system then putting processes in place for checking high waste or high theft product can help profit greatly!

For those who don’t invest the time, here are 12 reasons why it’s important to carry out a regular stock take:

  1. To measure how well a product is performing against others.
  2. To support future efficiencies in ordering and forecasting future stock levels.
  3. To stay up to date with current purchase prices and to identify increases – stocktaking can encourage ongoing pricing reviews and supplier cost price changes.
  4. To expose and eliminate theft within the business – a rare but real issue.
  5. To help calculate how much stock costs to buy, what price it should be sold at, and how much stock is on-site.
  6. To ascertain accurate gross profit margins for your business’ products.
  7. To help maintain gross profit levels or highlight why targets are not being met.
  8. To stay aware of what stock remains in the building and its use-by date.
  9. To discover dead stock: realising how long had particular products have been in stock helps determine which items sell and which do not.
  10. To provide evidence for future budgeting exercises.
  11. It supports EPOS data use and reporting and helps you make the most out of the system.
  12. To be consistently on top of your information and performance.

If you want to discuss stocktaking processes, or any other operational processes please contact Andrew on T: 07741017494 or E: andrewb@malcolmscott.co.uk