“Stocktakes – the benefits other than financial”

Stocktakes provide additional benefits than just determining asset values. Conducting a stocktake is not simply about accepting the values at face value, but rather it serves as an opportunity to identify and address any variances that may exist. By conducting a thorough analysis of the discrepancies, businesses can root cause the variances and fix any underlying issues, akin to fixing a squeaky wheel.

While many people are familiar with the concept of cyclic stocktakes and spot-checks, there are other types of stocktakes that can be employed to further enhance the inventory management process. These “others” include perpetual stocktakes and rolling stocktakes. A perpetual stocktake involves continuously updating inventory records in real-time, allowing for immediate identification of any discrepancies. On the other hand, a rolling stocktake involves conducting stock counts for specific sections or subsets of inventory at regular intervals throughout the year.

Implementing a detailed stocktake program is crucial to ensure accurate inventory management. Such a program should outline the procedures, responsibilities, and frequency of stocktakes. It should also incorporate a comprehensive review process to identify and eliminate the root causes of variances. This systematic approach not only improves the accuracy of asset valuation but also helps prevent future discrepancies.

One important aspect of inventory management is the implementation of an active SKU (Stock Keeping Unit) ratings system. This system categorizes items based on their value and importance, typically using labels such as A, B, and C. A-rated items are high-value items that require close monitoring and stricter management. B-rated items have moderate value, while C-rated items have relatively low value. By categorizing items in this manner, businesses can allocate resources and management attention accordingly, ensuring that the most critical inventory items receive the necessary focus.

The value in the stocktake process goes beyond the event itself. Variances should be thoroughly investigated using root cause analysis (RCA) to determine if any patterns or recurring issues exist. This analysis helps identify the underlying causes of the discrepancies, such as inaccuracies in recording, theft, or inefficient processes. Once the root causes are identified, a process or system review can be conducted to address and eliminate them, thereby improving overall inventory management.

For those interested in delving deeper into stocktaking and inventory management, Module 7 iA of the Inventory Academy’s Inventory Management course provides in-depth coverage of the research, investigation, and stocktake functions. It offers detailed guidance on conducting stocktakes and suggests procedural applications to ensure accuracy and efficiency. The course is available on Udemy and can be accessed using the following link: [Insert Udemy course link]

In conclusion, stocktakes offer more than just a means to determine asset values. They provide an opportunity to identify and address variances through root cause analysis, ultimately improving the overall inventory management process. By implementing a detailed stocktake program, incorporating an active SKU ratings system, and conducting thorough investigations, businesses can optimize their inventory control and mitigate potential issues. To learn more about the benefits of a structured approach to root cause analysis and inventory management, feel free to reach out and start a discussion on how it can benefit your business.

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For additional content –

“Managing Inventory Costs: A Key Component of Your Supply Chain Financial Strategy”(Opens in a new browser tab)

“Maximizing Warehouse Efficiency through Correct SKU Slotting”(Opens in a new browser tab)

“Bridging the Gap: The Importance of Training in Understanding Business Metrics”(Opens in a new browser tab)

Supply Chain Blogs(Opens in a new browser tab)