How ERP reduces the pain of the annual year-end stocktake

It’s that time of the year again when businesses start planning their annual stocktake for the fiscal year-end. This involves reconciling the physical stock with the inventory records. While the yearly stocktake is necessary to support the annual audit, there are other effective ways to ensure stock accuracy throughout the year. In this article, we will explore how an ERP system like Sage X3 helps maintain accurate inventory.

What is stocktaking?

Stocktaking is an essential process where the quantity and quality of the items are physically verified in the warehouse. It’s a meticulous task that involves counting every single piece of stock and noting down the quantities. Additionally, the condition of each item should be carefully inspected to ensure its suitability for sale. Without regular stocktakes, it becomes impossible to keep track of inventory, which is crucial for efficient inventory management.

Stock and inventory are not the same thing though: stock refers to the supply of finished goods that are ready for sale, while inventory encompasses both finished goods and the various components needed to create a final product. Therefore, it’s crucial to include both in stocktaking practices as they directly impact sales, production and purchasing processes.

Why is stocktaking important?

Even with an inventory management system in place, it’s still crucial to conduct regular stocktaking. This practice not only helps uncover any issues with an organisation’s inventory but also presents valuable opportunities to address them. Look at some of the benefits of stocktaking below:

Understand where cash is

Stocktaking is the link between financial figures and what’s going on.

Safeguard against theft and fraud

It is not uncommon for businesses dealing with goods to experience missing orders, damaged products, and even theft. However, by conducting a stocktake, recurring patterns of damaging behaviour can be identified, and proactive measures can be taken to address them.

Monitor business performance

Understanding the exact stock quantities and how they align with an organisation’s plans and predictions is crucial in determining whether the business is on track to meet its goals. Identifying any issues can serve as a catalyst for implementing necessary changes to enhance operational efficiency.

Improvement of stock holding

To always ensure minimal stockholding, it is crucial to achieve optimal stock levels about consumption levels. Reducing stock holding is of utmost importance as it frees up cash and minimises potential losses.

Increase staff efficiency

When employees are required to count every item, it enhances their understanding of the products, the organisation, and the locations in the warehouse.

Regarding stocktakes, it’s crucial to consider the frequency at which stock needs to be counted. Determining the optimal number of counts can vary significantly depending on factors such as the complexity of an organisation’s inventory.

Making sure products can be accurately tracked is crucial. The more confident a business is in tracking inventory, the less it needs to worry about counting stock. This is especially crucial for food manufacturers who deal with expiration dates. By conducting stocktakes more often, great benefits can be gained in cases like these. It’s also worth noting that businesses that don’t take stock frequently enough will face bigger disruptions compared to those that regularly conduct stocktakes.

Inventory counting methods

There are multiple methods of inventory counting, including cycle counting, ad-hoc counting and physical count:

  1. Cycle counting
    1. Cycle counting is a great way to audit inventory by regularly counting a selection of items. With cycle counting, a business can ensure that inventory counts usinare accurate and quickly identify any discrepancies.
    2. The frequency of cycle counting depends on the size and complexity of the inventory, but it typically takes place every few weeks or months. This enables an organisation to stay on top of inventory management and make any necessary adjustments.
  2. Ad-hoc counting
    1. Ad hoc counting, also known as spot or blind counting, is a method to fix any inventory record inaccuracies that may occur outside of a regular counting period. This type of counting is done on the spot for areas that need attention or for products that are about to be updated. Employees count the assigned items and update the inventory data.
  3. Physical count
    1. During a traditional physical count, an organisation dedicates several days to counting every item in their inventory, across all of their warehouses, stores, and other locations. The outcome is a comprehensive count that acts as a reliable method of checks and balances, guaranteeing that the items on the shelves are accurately reflected in the inventory management system.

How Sage X3 helps keep your stock accurate

An Enterprise Resource Planning (ERP) system like Sage X3 offers a comprehensive range of features to allow different methods of stock counts, as well as other capabilities to streamline inventory management. Without an ERP system like Sage X3, a business would have to rely on outdated methods like using paper-based systems to do manual counting and stocktakes. This approach is prone to errors, time-consuming and only provides accuracy at the specific moment of counting.

Below is a summary of how Sage X3 can help keep your stock accurate and not just for the annual stocktake:

Stock counting methods:

  • Cycle, spot, annual zero stock counts
  • Enter, review and validate physical counts
  • Maintain last count data by product/size

Stock tracking:

  • Track inventory by physical location
  • Real-time overview of available stock, committed stock, reserved stock and stock in transit
  • Quality status and disposition (accepted, rejected, in Quality Control)
  • Lot and serial numbers
  • Expiration dates
  • Forward and backward traceability

Stock valuation:

  • Different stock valuation methods including FIFO (first in, first out), LIFO (last in, first out) and average costing

Location management:

  • Flexible location numbering formats
  • Dedicated, random, and dynamic storage types
  • Suggested put-away and picking location assignments
  • Dedicated to single or multiple items/location
  • Immediate, delayed, or blocked access
  • Automatic bin location replenishment

Mobile automation:

  • Increase productivity through faster put-away and picking times
  • Real-time information without keying errors from the warehouse and shop floor
  • Verify data before it is posted into Sage X3
  • Accurate inventory counts resulting in lower carrying costs and fewer inventory errors
  • Reduced overhead by accommodating higher data volumes with fewer errors

Nobody wants to deal with outdated or incorrect inventory. It’s essential to manage inventory in a timely and efficient manner. Sage X3 helps to achieve this, by providing visibility, flexibility and control. This ERP system can help to keep stock accurate throughout the year, just not once a year.

Download our Inventory Management Excellence On-Demand Event to watch a demonstration on how to optimise inventory processes with Sage X3.

 

2024-01-17T09:54:54+00:00November 29, 2023|Blog|
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