Physical stock not matching system stock: how to find the gap
Shops and retail. By Aman Dobriyal. Updated .
A difference between physical stock and system stock is almost never one big mistake. It is a few small habits repeated every day, until the book says twelve pieces and the shelf has nine.
You can find the cause without software. Here is how to count so that the count tells you something, and what to change afterwards.
Why there is a difference between physical stock and system stock
- Goods go on the shelf before the purchase bill is entered. They sell before the book knows they arrived.
- The right design is billed in the wrong size or colour. Now two items are wrong, one too high and one too low.
- A sale goes through without a bill, or under a general item because nobody could find the real one.
- A return or exchange goes back on the shelf with no entry.
- Fabric sold by the metre. The roll is shorter than the book says, because every cut is a little generous.
- Samples, display pieces and damaged goods that were never written down.
- Stock moved between the shop and the godown without a note.
- Theft. It belongs on the list, but rule out the others first. They are far more common and much easier to fix.
How to do a stock count that finds the cause
- Don't count the whole shop. Pick one rack or one category.
- Count before opening or after closing, so nothing sells mid-count. Enter every pending purchase bill and return first.
- Use two people. One counts, one writes. Count what is on the shelf without looking at the book figure.
- Write the book figure next to each count, and the difference next to that.
- For each difference, look at that item's purchases and sales since the last count. You are looking for a pattern, not a culprit. Is it always sizes? Always one supplier's goods? Always fabric?
- Correct the book figure, with the date and the reason.
- Next week, count a different rack. Keep going until you are back at the first one.
Counting one rack a week beats counting everything once a year. The yearly count tells you how much is missing. The weekly count tells you why.
A stock count sheet in Excel
- Item code and name
- Size and colour, as separate columns
- Book quantity
- Counted quantity
- Difference, as a formula: counted minus book
- Reason, once you know it
- Counted by, and the date
Sort by the biggest difference. Keep each count as its own sheet, so you can put the same rack's counts side by side and see whether the gap is closing.
Four habits that stop the gap coming back
- Nothing goes on the shelf until its purchase bill is entered.
- Every piece carries a tag with its own code for that size and colour. Bill from the tag, never from memory.
- A return is entered before the piece goes back on the shelf.
- Samples, display pieces and damage get written down the day they happen.
Where a register and Excel break
A shop that sells by size and colour has twenty rows for one design. A register can't keep up with a day's sales at that level, and an Excel sheet is only as fresh as the last time someone typed the bills into it. By the time the count sheet is ready, three more days of sales have gone through.
So the book figure is already wrong at the moment you count, and you can't tell a real gap from a late entry.
What software changes
In the billing system I build for retail shops, stock goes down when you sell and up when you buy, by size and colour. Bills are made by scanning the barcode tag, so the wrong size is hard to bill. Supplier bills are typed in or read from the supplier's PDF, and tags print for the new stock. Returns, exchanges and transfers between shop and warehouse are entries, not notes. There are lists of low, negative and unsold stock, and a log of every change with who made it.
What it doesn't do: count the shelf. You still count. The difference is that the book figure is right at the moment you count, so a gap means something real happened.
This comes up for
Short answers
Why does physical stock not match system stock?
Usually because of entries that happen late or not at all: goods shelved before the purchase bill is entered, the wrong size or colour billed, returns put back without an entry, and samples or damaged pieces never written down. Theft is possible but is rarely the first cause.
How often should a shop count its stock?
A small part every week works better than everything once a year. Count one rack or one category at a time, outside shop hours, and move round the shop until you are back at the start.
What should I do when the count and the book disagree?
Check that item's purchases and sales since the last count to find the reason, then correct the book figure with the date and the reason written next to it. Look for a pattern across items before blaming a person.
Stock by size and colour, tied to every bill and purchase, is the base of my retail billing product. If your count and your book never agree, see how it works, or leave your number and I'll call you back. Retail POS, stock and GST billing. Leave your number for a call back.