Stock taking is the process of physically counting a company’s inventory to determine the quantity and value of goods on hand. The purpose of stock taking is to provide an accurate and up-to-date record of a company’s inventory, which is important for financial reporting, inventory management, and cost control. There are several different systems of stock taking, but some of the most common include:
- Periodic Stock Taking: This system involves counting inventory at specific intervals, such as monthly, quarterly or annually. The advantage of this system is that it is simple and easy to implement, but the disadvantage is that it may not provide an accurate picture of inventory levels throughout the year.
- Continuous Stock Taking: This system involves counting inventory continuously throughout the year, either by department or by location. The advantage of this system is that it provides an accurate and up-to-date picture of inventory levels, but the disadvantage is that it can be time-consuming and costly.
- Cycle Stock Taking: This system involves counting inventory for a specific period, such as a week or a month, and then rotating to another department or location. This method often requires a dedicated stock-taking team, the advantage is that it allows management to keep track of inventory levels regularly, and the disadvantage is that it can be costly and disruptive to operations.
- Barcode System: This system involves using barcode scanning equipment to quickly and accurately count inventory. This method greatly increases the accuracy and speed of stock-taking.
- Perpetual inventory system: This system is an inventory management method where each time inventory is added or removed it is recorded in the inventory system. The perpetual inventory system uses software to keep track of inventory levels and the value of goods on hand, the system is updated each time a purchase or a sale is made.
The system of stock taking a company chooses to use will depend on the size and nature of the company’s inventory.
