Stock Discrepancy: 10 Causes and How to Fix Them (Step-by-Step)

Last updated: April 2026

Studying your stock discrepancies is a hugely important part of inventory management. Only with that knowledge in hand can you begin to make improvements to your production process, your products, and your bottom line.

But before you can fix a discrepancy, you need to understand what it actually means, and why it keeps happening.

What is a stock discrepancy?

A stock discrepancy is the gap between the inventory quantity your records say you have and the quantity you physically count on your shelves.

Every maker finds these eventually. The count says you have 200g of beeswax on hand. You reach for it and there’s a near-empty bag. Or your system shows 12 finished candles ready to ship, but you can only find nine. That gap, whatever its size or cause, is a stock discrepancy.

It can happen to materials, finished products, or work-in-progress items. The cause might be human error, theft, damage, or simply a process that hasn’t been recorded consistently. Regardless of where the gap comes from, it matters: inaccurate counts mean inaccurate costs, which means your pricing and your tax numbers could both be wrong.

What causes stock discrepancies?

Stock discrepancies don’t usually come from one big mistake. They tend to build up from a handful of small, repeatable process gaps: things that each seem minor on their own but stack up over time.

Here are the ten most common causes for makers:

1. Purchases not recorded accurately: you received stock but didn’t enter it into your system, or entered the wrong quantity
2. Vendor sent the wrong amount: your supplier shipped fewer (or more) units than your purchase order stated
3. Damage in transit: items arrived broken or spoiled before you counted them in
4. Damage during production: a batch failed, product was dropped, or materials were wasted in ways that didn’t get logged
5. Expiry and disposal: use-by dates passed and you disposed of materials without recording the write-off
6. Stock in the wrong location: items were put back in the wrong spot and simply weren’t found during the count
7. Mislabelled stock: a material or product was given the wrong SKU or barcode, making counts go to the wrong record
8. Theft: internal or external, unpleasant to consider but worth ruling out if nothing else fits
9. Counting error during stocktake: a miscount, a double-count, or a section that was skipped
10. Manufacture history not recorded: you used materials to make a batch but didn’t log the production run, so the system still thinks those materials are on hand

That last one catches a lot of makers. If your manufacture history is missing, your material records will read higher than reality. Conversely, if purchases aren’t entered, records will read lower than what you actually have.

How to identify discrepancies in your stock

The first step is completing a physical count (either a full stocktake or a cycle count of a specific category). Once you have actual quantities on paper, compare them to what your records say.

If your counts are off by more than you expected: that’s normal when you’re starting out with perpetual inventory tracking. Don’t see it as a failure. See it as the system working: it’s showing you exactly where your process has gaps.

For a full walkthrough of counting procedure, see how to do a stocktake.

How to resolve stocktake discrepancies

Once you’ve found a discrepancy, work through this procedure systematically. Don’t jump straight to adjusting numbers. Investigate first.

Step 1: Recount the affected stock. Before doing anything else, count it again. A simple miscount is the most common explanation and the easiest to fix.

Step 2: Check alternate locations. If items are missing, look in nearby shelves, storage areas, or anywhere stock might have been put away incorrectly. Mislocation is especially common in shared workspaces.

Step 3: Check receiving records. Was the stock actually received? Cross-reference your purchase orders against what was entered in your inventory system. It’s surprisingly common to mark an order as received before it actually arrives.

Step 4: Review returns. For finished product discrepancies, check whether any customer returns came back that weren’t re-entered into your system.

Step 5: Verify the unit of measurement. This one trips people up often. If your system tracks a material in grams but you counted in ounces, the numbers won’t reconcile even if the stock is correct.

Step 6: Check SKUs and labelling. Confirm the item you counted matches the record you’re comparing it against. Small variations (fragrance, size, colour) are a frequent source of confusion, especially if products are grouped during counting instead of separated by variation.

Step 7: Audit your manufacture history. Look for unrecorded production runs. Missing manufacture records will make material levels look higher than they are. You can test this by carefully measuring materials for your next batch and comparing it against the recipe on record; any significant variance might explain the discrepancy.

Step 8: Look for data entry errors. Check your purchase and manufacture history in your system for obvious mistakes: duplicate entries, wrong quantities, or records entered against the wrong product.

Step 9: Investigate theft. If you’ve ruled out everything else, this is a step you have to take. Check whether employees or others with access could have removed stock. It’s uncomfortable, but skipping this step doesn’t make the inventory accurate.

Once you’ve pinpointed the cause, make the adjustment in your system with a note explaining what happened. A good note now saves you from investigating the same discrepancy in six months.

How to prevent stock discrepancies going forward

Finding and fixing a discrepancy is one thing. Stopping it from happening again requires building consistent habits into your process.

Record every production run at the time it happens. The single biggest source of material discrepancies for makers is manufacture history that gets entered in batches, or not at all. If you made 20 candles on Tuesday, log it Tuesday. Waiting until the end of the week means you’ll forget details, approximate quantities, or skip runs entirely.

Enter purchases when you receive them, not when you order them. It’s tempting to log a purchase order as soon as you place it. But the moment the stock enters your hands is the moment your inventory changes, and that’s when it should be recorded.

Count in the same unit you track. Pick a unit of measurement for each material and stick to it across counting, purchasing, and recording. Switching between grams and ounces mid-process is a reliable way to introduce discrepancies.

Label everything consistently. Clear, consistent labelling reduces the chance of stock being miscounted under the wrong SKU. This matters more as your range grows. See how to properly label your materials for a practical approach.

Run cycle counts regularly. Rather than waiting for an annual stocktake to discover problems, counting a rotation of your stock throughout the year means discrepancies get caught while the trail is still fresh. Small problems are easier to investigate than big ones. Read more about safety stock and keeping buffer quantities that give you time to investigate before you run out.

Track shrinkage as its own category. Spoilage, failed batches, and damaged goods happen in every maker’s business. The mistake isn’t having shrinkage: it’s not recording it. When you log a write-off at the time it occurs, your records stay accurate and you get real data on your true material costs. For more on this, see what is inventory shrinkage.

Tracking stock discrepancies with spreadsheets

Excel spreadsheets are a reasonable starting point, quick to set up and low cost. But they become unwieldy fast, and for anything beyond a simple product range, they create more discrepancy risk than they solve.

Data entry and updates are entirely manual. There’s no automatic deduction when you complete a production run. There’s no alert when a count doesn’t match a record. And there’s no audit trail that shows you why a number changed.

If you’re just getting started, this free cycle count Excel template will help you run your first count. But if you’re finding discrepancies regularly, a spreadsheet won’t tell you where they came from.

Worth knowing: spreadsheets also lack real-time tracking and can’t handle complex inventory situations like sub-assemblies or work-in-progress items.

Using software to track your stock discrepancies

The right software catches discrepancies earlier and makes them easier to resolve.

When every production run automatically deducts materials, when purchases update stock levels the moment they’re entered, and when your count sheets pull from the same data as your recipes and orders, there are fewer places for a discrepancy to hide, and far less manual work to find one.

Stock discrepancy tracking is usually a core feature of an MRP or ERP software product rather than a standalone application. For makers specifically, Craftybase’s cycle count software offers real-time tracking, automated deductions from recipes, and a full history of every adjustment, so when a discrepancy does show up, you have the records to investigate it properly.

Start your 14-day free trial today.

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