Monday, June 21, 2010


I got to learn the entire process of stock take at BHS-Al Ain. Here the stock take used to happen yearly and was also done in a very systematic way.

Since stock take involves inventory it is important to know the difference between physical stock, book stock and system stock. Physical stocks involve all the merchandise physically present in the store. System stock is the number of stocks or quantity of stocks which are recorded in the system, also known as stock in hand. The book stock is the quantity which is referred in the book of accounts, mainly in all the hard copies like goods receipt registers, invoices, sales registers, etc.

Stock take is a process where one physically needs to count the entire stock within the store and tally the same with the system stock. Stock take is one of the important activities conducted in retailing as it involves knowing your stock in hand, your stock value, identifies damages and shrinkages. In short a stock take helps the retailer understand the inventory of his store in actual. It helps him also to analyse his business as to how much profit is he making. The performance of the store and its profitability is identified by this process. Hence it is very essential that a stock take when conducted needs to be done very systematically with proper planning to get the perfect result or else the entire purpose of the same is not justified.
The manager is responsible for the entire process. A stock take is performed once in a year, half yearly or quarterly depending on the size of the store and the quantity and volume of stocks available. To ensure a proper and successful stock take the entire activity is conducted during non-trading hours within the store. A proper checklist should be in place and pre-stock take activities need to be conducted

Pre-stock take activities:
Preparation for a stock take should happen at least one week in advance. The manager responsible needs to first plan out the schedule and prepare the same so as every team member is aware of his or her duty shift and activity assigned during the stock take period. Mostly a stock take exercise is done after the store is closed for trading. A separate team is assigned to do the stock take so as the day to day operations within the store and sale is not affected. So for the same the manager has to prepare a two separate schedule during this period, one for the night shift operations and one for the day shift operations. This schedule also involves the security movements, house keeping movements, and the maintenance movements. The preparation of the schedule is very crucial as it involves a complete shift of the operations flow during this period.

The layout of the store needs to be prepared first. The layout should show the exact number of fixtures and their positions in each section within the department. This will help the manager to know the number of locations to be created. Based on the number of locations he will be able to decide the number of staff strength required for the stock take. Once he is clear about this will he be in a position to prepare the schedule. Hence along with the schedule the preparation of store layout is also of utmost importance. Every section will be considered as one location and all the individual fixtures within the sections will be termed as sub-location. All the locations along with their sub-locations need to be mapped accordingly in the layout by the store manager. This is important as this will tell how many locations and sub-locations need to be prepared to conduct a stock take. It will also give an idea as to which department will take how much time for a stock take and if the department is big how many sections it need to be divided into and accordingly how many teams need to be made. He will also ensure that no big sections are created, because if a section is big in size there is a high chance of creating errors in counting during stock take by the team members. So if suppose the menswear department is huge it is divided into sections like men’s casual wear, men’s formalwear and men’s accessories. Considering men’s casual wear as one section it will be marked as location A. Now if this section has six fixtures then the location is marked as A-1, A-2 to A-6. (Where A-1 to A-6 are sub-locations)

The store manager should ensure that all material movements to and fro the store needs to be stopped one day prior to stock take. The warehouse team should also ensure all pending inwards and outwards have been updated in the system, damages and shop returns are out-warded from the store to the warehouse. An official communication will be sent to the head office, to the internal audit team, to the warehouse team and to all concerned category team and vendors informing the dates when the stock take to be held. Once the layout is in place the manager will be in a better position to decide the number of teams to be allocated for the stock take. He will create locations, mark them alphabetically, and number the fixtures accordingly. The fixtures need to be numbered location-wise and section-wise. This will allow the manager to know how many sections are there and then will prepare the control sheet. The control sheet will be with the controller throughout the stock take. The control sheet will list the number of sections, the fixtures in each section and the department/section description. Control sheet should denote the number of locations and total number of fixtures in each location, name and signature column of the counting team. He will then create the location counting sheet, which each individual team will carry during stock take and record on the sheet.
Prior to the stock take all stocks need to be checked for proper labels and barcodes on the floor. All stocks need to be placed properly in their respective sections as per the placement standards of merchandise, i.e. size-wise, colour-wise, style-wise. All merchandise of same category to be grouped together All fixtures are then labelled as per the locations planned in the layout by the manager prior to the stock take as “START” and “FINISH” with the section alphabet and fixture number as shown in the figure below.

Processes for stock take:
The store manager and department manager are responsible for the pre stock take activities and to ensure 100% stock take is done. Stock take is not initiated until the internal auditor is not available.
The store manager assigns one of the department managers as the controller for the stock take.
Ø The controller keeps the control sheet ready with him.
Ø He then assigns the teams for the stock take,(Each team has two members)
Ø He provides the counting sheets as per the locations,
Ø He mentions the same in the control sheet as shown in the figure and
Ø Ensures every individual also signs in the column provided in the control sheet.
The team responsible for counting the stocks in a sub-location available within a particular location need to sign the start sheet and proceed for counting.
The finish sheet needs to be again signed. This activity ensures that all locations are scanned or counted and none is missed out. Direction for counting or scanning of stocks during stock take is
This direction of counting the stocks needs to be followed religiously. This particular flow helps the controller during stock take to easily track the stock keeping unit of any particular section and also it helps during a recounting or checking of stock count.
This activity needs to be done with utmost care and with full concentration. The entire team responsible for stock take need to get the activity done very religiously.
Once all the sub-locations within a location is completed the counting sheet is submitted back to the controller who again mentions the submission time and hands over the next counting sheet. This process continues till all the locations are counted completely. The controller checks all the start and finish labels to see if they are signed by the respective team. This also ensures again that no location is missed out. Ones the controller assures the counting is completed he then hands over the same sheets to the teams to do the cross checking activity. The controller makes sure that the team assigned to check one location has not done the counting of the same location earlier. So a complete different team is assigned to do the counter check activity. Any discrepancy found during this activity is brought to the notice of the controller and the auditor who then rectifies the same in the counting sheet. Ones this activity also is completed and the controller confirms the same through the control sheet he announces the completion of the stock take process at the front end level.
All the counted and checked sheets are then tallied by the respective department managers for their respective departments with the system stocks in the presence of the auditor. The auditor notes all the discrepancies and submits his final report.
This process is followed if the stocks are physically counted on the shop floor.
NOTE: If the counting is done with the help of Portable Data Terminal scanner (PDT scanner) the first SKU’s barcode is mentioned in the counting sheet.
At the end of the sub-location, the last SKU’s barcode is mentioned in the counting sheet.
The PDT scanner number should also be mentioned on the counting sheet.
All this is done so as to keep track as to from which SKU the scanning began and ended in case in between the PDT scanner needs to be replaced or changed, or kept for charging the battery.
At the end the data is downloaded in the system and the stock discrepancy report is generated. This report is then verified by the auditor who puts down his comments, based on which the store manager has to reply within a stipulated time as per the organizations policy.
If the discrepancy is found to be in a big way the entire stock take is repeated. Small discrepancies found are re-looked at and if the errors are found the same is mentioned in the investigation report and handed over to the auditor for further comments.
Global count:
Most of the Exclusive Brand Outlets , like jewellery stores, shop-in-shops selling expensive products like cosmetics and perfumes, watches, accessories do a global count on a day to day basis. Global count is nothing but globally counting of each and every product displayed in the shop. It has to be done twice in a day, ones first thing during store opening and ones after closing. Its motive is to just check the status of the entire stock displayed and not to check inventory at SKU level, and to know whether any stock is stolen or missing at a global level.


basheer g.n said...

thankz alot for great idea by basheer


great help for my exam and also very helpful in understanding the retail in store process performance.

4TH SEM (2010-2012)

tim watson said...

Very nice idea.

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Nancy Clara said...

Thanks For Your valuable posting, it was very informative.

Accounts Data Entry