Stocktaking shows how closely the actual inventory matches accounting data. For a manager, three results matter: the amount and structure of discrepancies, the processes in which they appeared, and the decisions that should prevent errors from recurring.
The technical procedure for creating a stocktaking sheet, scanning goods, and closing the document is already described in the article about conducting stocktaking in Torgsoft. Here we look at stocktaking as a management process for a store, warehouse, production, and e-commerce.
What management task stocktaking solves
Accurate balances affect purchasing, product availability, order fulfillment, and the amount of money invested in inventory. An accounting error spreads to subsequent operations. A non-existent balance delays purchasing, causes a refusal to the customer, and distorts demand analysis. An unrecorded surplus increases unnecessary orders and hides receiving or return errors.
A discrepancy between the actual stock and the program may arise because of:
- an error during receiving, sale, return, transfer, or write-off;
- misclassification by model, color, size, batch, or unit of measure;
- goods in reserve, picking, delivery, repair, or the returns area;
- unrecorded materials, waste, or unfinished operations in production;
- theft, damage, natural losses, or incorrect labeling.
The result of the first count confirms an accounting mismatch. Before making decisions about employees, recheck the goods, movement documents, reserves, returns, write-offs, and user actions.
Full, cycle, and spot stocktaking
Full stocktaking covers all goods in a defined accounting center. It is needed for a general reconciliation, a change of materially responsible person, warehouse reorganization, or preparation of reliable data for a control date.
Cycle stocktaking covers part of the assortment on a regular schedule. Over the year, the business checks the entire inventory, while risky items are counted more often. This approach reduces the workload on the team and detects systemic errors faster.
Spot checking is carried out after an event or signal: a large delivery, mass return, promotion, transfer between warehouses, appearance of negative balances, employee change, or repeated refusal in an online order due to lack of goods.
For most businesses, it is reasonable to use an annual plan of cycle checks, spot stocktaking after risky events, and full stocktaking at moments defined by the manager or legislation.
How stocktaking differs across business formats
| Format | What must be separated | Main risks | Count organization | What the manager analyzes |
|---|---|---|---|---|
| Retail store | Sales floor, back room, showcases, reserves, returns, and defective goods | Misclassification of variants, sale under another barcode, theft, unrecorded returns | By departments, shelves, or product types; risky items are checked more often | Recurring discrepancies by goods, shifts, employees, and operations |
| Wholesale warehouse | Storage bins, receiving area, picking, shipment, goods in transit | Incorrect placement, incomplete picking, duplicated receiving, unclosed transfer | By zones and product groups, with movement fixed in the counting area | Accuracy of receiving, placement, picking, and transfer between zones |
| Production | Raw materials, materials, semi-finished goods, finished products, waste, and defects | Unrecorded consumption, unit-of-measure error, unregistered output or waste | Separately by inventory status and storage locations; production operations are brought to a defined status at the cut-off moment | Deviation of actual consumption from documents, finished product output, and causes of defects |
| E-commerce | Available balance, reserves, picked orders, shipments, returns, and cancellations | Double selling, delayed reserve release, picking error, late synchronization | Cyclically for fast-moving items and after peaks in orders, returns, receipts, and transfers | Refusals due to lack of goods, discrepancies between channels, and reserve accuracy |
| Network and omnichannel | Each accounting center, central warehouse, inter-warehouse transfers, and online reserves | Goods physically in one location and recorded in another, unfinished transfers, duplicated reserves | By accounting centers with one control date for related transfers | The source of the discrepancy in the supply chain and its impact on availability across all channels |
How to determine the frequency of checks
A single calendar for the entire assortment spends time on stable items and detects errors in risky items too late. Frequency should be determined by a combination of factors:
- value and margin of the product;
- movement speed: sales, returns, transfers, picking;
- size, attractiveness for theft, shelf life, and natural losses;
- history of shortages, misclassification, and repeated adjustments;
- number of storage locations and sales channels;
- time since the last physical check.
For a starting schedule, inventory can be divided into three groups. Items with high value, high movement speed, or a history of discrepancies are checked weekly or once every two weeks. Medium-risk items are checked monthly or quarterly. Stable bulky and slow-moving items are checked less often, with mandatory inclusion in full stocktaking.
In Torgsoft, the «Inventory date» column helps find goods that have not been included in stocktaking for a long time at a specific warehouse. The date should be used together with the product risk. A recent date does not guarantee accuracy if many operations occurred after the count.
Management regulation for stocktaking
1. Define the goal, scope, and control moment
Before the count begins, the manager approves the accounting center, product groups, physical zones, date, and cut-off time. The status of goods in reserve, transit, repair, return, picking, and production is defined separately. Each unit must fall into one clear status.
2. Set rules for goods movement
Temporary suspension of receiving, transfers, picking, and sales in the counting area increases result accuracy. If operations continue, local control is needed: a defined area, start and end time, recording of all movements, and a responsible person for reconciliation.
In a Torgsoft stocktaking sheet, goods can be blocked during adding, after the first scan, or handled without blocking according to movement accounting rules. For a store that continues selling, blocking after the first scan reduces the risk of changing the balance of an already counted item.
3. Prepare the physical space and data
Before stocktaking, complete receiving of accepted batches, register known write-offs and returns, sort unidentified goods, and check barcodes and units of measure. Mark and separate reserves, defects, returns, and customers’ goods. In the warehouse, define zone boundaries, the direction of counters’ movement, and the method for marking already checked locations.
4. Separate roles
The coordinator defines the scope, movement rules, and team composition. Counters record the actual quantity. The controller checks significant and unusual discrepancies. The right to close the sheet and post adjustments should remain with the manager or an authorized person.
An employee may count their own zone, but the recount of disputed items is better assigned to another person. This separation reduces the influence of expected results and ordinary error.
5. Use blind counting
The team records the actual quantity without a hint about the accounting balance. In Torgsoft, access settings can hide warehouse quantity, wholesale price, and result reports from the seller. For the mobile app, the right to see the quantity in the sheet is configured separately.
6. Recount significant discrepancies
A second count is needed for expensive goods, unusually large deviations, zero actual quantity with a positive balance, and recurring misclassification. The recount is performed by another person who also does not see the expected quantity. The manager defines the materiality threshold in units and by cost.
7. Find the cause before closing
Check product movement from the previous control date: receipts, sales, returns, reserves, write-offs, transfers, and production documents. Analysis of similar goods helps find misclassification. A shared barcode for different variants, duplicated cards, and an incorrect unit of measure require correction of the catalog or labeling process.
8. Close the sheet and assign changes
After the result is approved, Torgsoft creates receipt documents for surplus and write-off documents for shortages, after which the warehouse matches the actual quantity. This corrects the accounting balance. To eliminate the cause, the manager separately assigns an action, responsible person, and deadline.
Cancellation of closing is safe only immediately after the operation, while there has been no new movement for the goods. If movement has already occurred, it is advisable in Torgsoft to create a new adjustment sheet for the required items.
How to investigate typical discrepancies
- Shortage of one characteristic and surplus of another often indicate misclassification, an incorrect barcode, or selection of a neighboring item during sale.
- Surplus without a related shortage requires checking an unposted delivery, return, duplicated card, and initial balance error.
- Discrepancies after transfer arise because of an unfinished transfer, receiving by the wrong accounting center, or physical placement in another zone.
- Online balance errors are checked through reserves, canceled orders, returns, picking, and channel synchronization time.
- Raw material shortage requires reconciliation of the recipe, units of measure, production documents, actual output, defects, and waste.
For each significant discrepancy, it is useful to record a cause code: receiving, storage, sale, return, transfer, production, product catalog, natural losses, theft, or cause not established. After several cycles, it will become clear where a process change will produce a meaningful result.
Which indicators to compare between stocktakings
The shortage amount alone is not enough. It depends on the volume of checked inventory, valuation method, and assortment structure. For management, several indicators should be used:
- item accuracy = number of product items (SKU) without discrepancies ÷ number of checked items × 100%;
- absolute error = sum of absolute differences between actual and accounting quantity in physical units;
- value of shortage, surplus, and misclassification using the same price type in all compared periods;
- share of recurring discrepancies for the same goods, zones, and causes;
- cycle coverage: share of inventory checked during the planned period;
- for e-commerce: refusals and cancellations due to lack of goods with a positive balance.
There is no universal acceptable shortage percentage for all types of business. Food, clothing, electronics, spare parts warehouse, and production have different risk structures. The baseline should be determined from your own history, after which dynamics should be assessed using the same methodology.
The program allows you to create selective sheets by product groups, block goods movement at different stages of counting, hide the accounting quantity from the performer, and conduct stocktaking with a scanner, manually, through a data collection terminal, or the Torgsoft Mobile App. Reports show shortages, surpluses, misclassification, and results by product types. After closing, the program creates adjustment warehouse documents.
Manager’s checklist
- the goal, accounting center, product groups, zones, and control time are defined;
- receiving, returns, write-offs, reserves, and transfers are registered;
- goods in transit, repair, picking, defects, and returns are marked separately;
- rules for sales and goods movement during counting are approved;
- the roles of counter, controller, and the person closing the sheet are separated;
- performers do not see the expected quantity;
- significant discrepancies are recounted by another person;
- causes are checked against movement documents and related goods;
- results are assessed by quantity, cost, and recurrence;
- an action, responsible person, and deadline are assigned for each systemic cause.
Frequently asked questions
Can stocktaking be conducted while the store is operating
Yes. It is necessary to count by controlled zones or groups, fix the cut-off time, and restrict movement of already counted goods. Torgsoft provides goods blocking modes for this.
Should the seller see the accounting balance
Blind counting is advisable for control stocktaking. Torgsoft can hide warehouse quantity, wholesale price, and result reports from the seller.
How often should stocktaking be conducted
The frequency depends on value, movement speed, discrepancy history, shelf life, number of storage locations, and sales channels. Risky goods are checked more often than stable ones.
Does a shortage prove employee theft
No. A shortage confirms a discrepancy between actual stock and accounting. The cause is established after recounting and checking receiving, sales, returns, write-offs, transfers, reserves, and user actions.
Why amounts in different reports may differ
The cause may be a different price type and whether misclassification is included. To compare periods, use one valuation methodology and check whether cost, retail, or wholesale price is shown.
Sources and methodological basis
- Torgsoft: creating a stocktaking sheet — counting methods, blocking, reports, and warehouse adjustment.
- Torgsoft: access settings — sheet restrictions for blind counting.
- Torgsoft: Mobile App — rights to enter and view quantity during stocktaking.
- ECR Retail Loss: Reduce inventory record inaccuracy — managing inventory accuracy as an end-to-end business function.
- ECR Retail Loss: Inventory record inaccuracy metrics — methods for measuring discrepancies by SKU, units, and relative indicators.
- Oracle Inventory Management: Cycle Count Creation — cycle counts by ABC classes, categories, schedules, and approvals.
- Microsoft Learn: Cycle counting — counts by zones, storage locations, plan, and events.
- Shopify: Ecommerce Inventory Management — cycle and spot checks after peaks in sales, returns, receipts, and transfers.
- IFRS Foundation: IAS 2 Inventories — inventory composition in trade and production and principles of valuation.
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