Stock Discrepancies: 10 reasons why your count may be wrong

Studying your stock discrepancies is a hugely important part of inventory management as it allows you to gain more knowledge about your production processes. Only with this knowledge in hand can you begin to make improvements to your process, your products and your bottom line.

What is a stock discrepancy?

A stock discrepancy is when there is a difference between the actual amount of inventory you have and the recorded amount in your system.

This can occur for a variety of reasons, such as human error, theft, or inaccurate recording. Regardless of the cause, it is essential to closely monitor and analyze these discrepancies to ensure the accuracy and efficiency of your inventory management.

How can I identify discrepancies in my stock?

After your first cycle count is complete, the next step is to try and find causes for any differences in your stock numbers. (If you haven’t yet discovered how cycle counting can completely revolutionize your maker business, you’ll want to read this blog post first: What is a Cycle Count).

If your stock counts are out a little more than expected, don’t despair: this is a very common scenario when starting with perpetual inventory tracking, so you are not alone.

Instead of seeing this as a failure, you’ll want to see these differences as opportunities to study your production process and make improvements where necessary.

To do this, it’s important to first work through the common scenarios that can result in stock-level mismatches. Stocktake discrepancies can usually be attributed to one of the following ten reasons:

1. Your purchases were not recorded accurately
2. Your vendors sent an incorrect quantity of ordered materials
3. You lost the stock due to damage when it was shipped to you
4. You lost the stock due to damage during your production process
5. You lost the stock due to use-by dates expiring and they have been disposed of
6. Your stock is in the incorrect location (misplaced)
7. The stock was mislabelled with incorrect identification
8. The stock was stolen
9. There was an error with the stocktake count
10. There was an error recording your manufacture history (usage of materials)

How to resolve stocktake discrepancies

From the major reasons above, you’ll now want to narrow down to a couple of suspected causes and then work through the troubleshooting guide below:

• Re-count the stock. This should be your first step if numbers aren’t matching up, as it could be as simple as a miscount.
• Look for the stock in another location. If you are finding a large number of items missing from your count, they may have been put back in an incorrect place.
• Check that you have received the stock. You may have marked this stock as arrived when it is still on order from the vendor.
• For product stock, check if any customer returns have arrived that have not been correctly entered into your inventory system.
• Ensure that the count has been performed in the same measurement unit you are recording your inventory levels in (i.e. material is tracked in grams, however, the count was performed in ounces).
• Verify that the SKU or other identification number is correct for the material and that it has not been mislabelled. Check that your inventory management system record matches the material you have counted.
• Ensure that the product is the correct one. Small differences in variations(i.e. size, fragrance) commonly mean that the wrong product is counted, or that the products are grouped together for the count rather than separated out by variation.
• Check your inventory management system for any errors with data entry - particularly your purchase and manufacture history.
• Check for unentered orders or manufactures that could be contributing to the difference. As a rule of thumb, missing manufacture (usage) history will mean your records will be higher than anticipated; missing purchases mean your records will be lower than you expect.
• Check to see if your previously entered manufactures accurately represent the actual material usage. You can test this by carefully double measuring your next batch of the product and comparing it to the manufacture record to see if there are any major differences that could be attributed to the missing or extra stock.
• Investigate if there is a possibility of employees or customers taking stock home. This is an unpleasant step to tackle, however is necessary if all other causes have been ruled out already.

Tracking stock discrepancies with spreadsheets

Excel spreadsheets have long been a go-to solution for inventory management, and for good reason: they are quick to spin up and cost very little (if anything at all). For all their advantages, they can rapidly become unwieldy and difficult to manage so are often not a great solution for ambitious businesses that are expecting growth.

If you are however looking for a simple and cheap option to get you started on identifying your stock discrepancies, this free cycle count free excel template is a good option.

It’s important to note that in Excel, data entry and updates are also entirely manual, time-consuming, and prone to human error.

Spreadsheets lack real-time (perpetual) tracking and its capacity to handle complex inventory situations (like sub-assemblies and unfinished products) is extremely limited.

Adopting software to track your stock discrepancies

Using software to track your stock discrepancies can help you streamline this process and make it more efficient. Having all of your inventory data in one place will allow you to easily identify any discrepancies and take necessary actions to resolve them. It also allows for easier tracking of your production processes, making it easier to pinpoint where improvements can be made.

Stock discrepancy tracking software is usually a core feature of an MRP or ERP software product, rather than a standalone application.

Craftybase’s cycle count software offers real-time tracking, automated data entry, and a suite of features tailored to address the unique needs of inventory management. It helps identify discrepancies faster and offers actionable insights to improve your processes.

So, leave the days of manual spreadsheets behind and upgrade to Craftybase, your comprehensive solution for efficient and effective inventory management. Start your 14 day free trial today!

In Conclusion

In conclusion, don’t be discouraged by stocktake discrepancies - instead, embrace them as opportunities to learn and improve your inventory management system. By following the steps outlined above, you’ll be able to identify and resolve any discrepancies in a timely manner, leading to more accurate stock levels and ultimately, a more successful business. Remember, knowledge is power - so use it to your advantage by regularly studying your stock discrepancies and making necessary changes for improvement.