How to do a stock count: preparation, count day and investigating discrepancies
How do you do a stock count, who does it and what should you watch for? A preparation checklist, count-day steps and what to do when a discrepancy appears.
A stock count compares the quantity physically in the warehouse with the quantity on record. It happens in three stages: preparation (scope, team, stopping movements), count day (independent and double counts) and investigating discrepancies (no adjustment until the cause is found). The result is more reliable if at least two people who do not manage the warehouse carry out the count.
In the last week of the year, the count sheets have been printed. The warehouse supervisor counts the first shelf, looks at the figure on the screen and shakes their head: the system shows forty, the shelf has thirty-six. Where are the other four? Was a dispatch not recorded, did a delivery go to the wrong shelf, or is the count wrong? With no answer, the day drags on, the team gets tired, and the count becomes a chore to be forgotten until next year. Count day starts like this in many businesses: the figures don’t match, staff come close to blaming each other, and at the end of the day the discrepancies are “corrected” one by one. In this article we explain how to plan a stock count, who should do it and how to proceed when a discrepancy appears.
A stock count is the process of counting the type and quantity of products physically present in a warehouse or shop and comparing them with the recorded stock. Its purpose is to match the records with reality and make the reason for any mismatch visible; correcting a figure on paper is only the last step.
Why do a stock count?
- To see whether recorded stock reflects reality; purchasing and sales decisions depend on this figure.
- To spot loss, damage, misplaced items and unrecorded movements early.
- For critical levels and reorder points to work properly; a wrong starting stock produces wrong alerts.
- So that finance and auditors can rely on the stock value.
- To find the weak points in warehouse processes, that is, in which product groups and which movement types discrepancies arise.
Who carries out the stock count?
The basic principle is that the person counting should not check their own records. The person who manages the warehouse can take part in the count and guide it, since they know the figures; but if they count a shelf alone and compare it with their own records, the result is biased. The division below works for a small or medium-sized warehouse:
| Role | Task | Note |
|---|---|---|
| Count supervisor | Sets the scope, date and team; collects the results | Can be the warehouse supervisor or someone from management |
| Counting team | Counts the shelves and writes the quantity on the count sheet | At least two people; if possible, including someone who does not work in the warehouse |
| Checker | Recounts items that show a discrepancy | Must be someone other than those who did the first count |
| Warehouse supervisor | Shows the layout and answers questions | Does not count their own warehouse alone |
| Data entry | Enters the approved count into the system | If this is someone who did not take part in the count, the process is easier to trace |
| Approving manager | Decides whether to adjust the discrepancy | The authority to adjust should be limited to a few people |
In a small team it may not be possible to fill all these roles with different people. In that case, at least make sure the person counting and the person entering the data are different, and leave approval of adjustments to a more senior manager. Two people checking each other’s work is much safer than one person both counting and adjusting.
Preparing for the count
- Define the scope of the count: the whole warehouse, a particular product group or specific shelves?
- Announce the count date and time; tell the relevant teams that there will be no receipts or dispatches during the count.
- Enter pending delivery notes, open orders and transfers into the records before the count.
- Tidy the warehouse: put stray boxes in place and move damaged items and items awaiting return to a separate area.
- Prepare the count sheets; product name and unit (each, box, kg) should be clearly shown, and counters should count without seeing the system quantity.
- Check equipment such as barcode scanners, labels, pens and lighting.
- Brief the counting team: how should a product that is also on another shelf be recorded, and how should an opened box be counted?
Count day step by step
- Stop receipts and dispatches, or mark any movements after the count starts separately.
- Divide the warehouse into zones or rows of shelves; assign a responsible team to each zone.
- Do not show counters the system quantity; they should write what they count on a blank count sheet.
- Label or mark each counted area so that counted and uncounted shelves are clearly distinguished.
- When the count is finished, compare the sheet with the system quantity and list the items that differ.
- Have a second team recount the items that differ; if the two counts agree, the discrepancy is real.
- Have the count supervisor sign the results and keep them with the count date.
A product that has not been counted is an unknown product, even if it is on record.
Rules to follow during a stock count
- Fix the unit. When boxes and individual items get mixed up, a large discrepancy appears for a single product.
- If you find the same product in more than one place, add up all the locations; don’t record just one of them.
- Count goods held in safekeeping, on consignment or belonging to customers on a separate sheet.
- Don’t mix goods in transit, already dispatched or not yet received into the count.
- Don’t erase or overwrite on the count sheet; if there is a mistake, cross it out, write it again and initial it.
- Don’t enter an adjustment the moment you see a discrepancy; find the cause first.
Where do you start if there is a discrepancy?
We cover the root causes of discrepancies in a separate article; here we give only a short roadmap that will help on count day.
| Situation | Where to look first |
|---|---|
| Items missing from the shelf | Recent dispatches, samples or returns that were never recorded |
| More items on the shelf than recorded | Unrecorded deliveries, double counting, products brought from another shelf |
| Product found somewhere else | Other warehouses and shelves, open transfers |
| Unit discrepancy | Box-to-item conversion, the unit on the product card |
| Discrepancy always on the same product | That product’s movement types and permissions |
What happens after the count?
A count does not end the moment you correct the figures. The real value lies in feeding what you learnt back into your processes:
- Summarise the count results by product group and warehouse; mark where discrepancies are concentrated.
- For discrepancies whose cause has been found, enter the adjustment with the reason; submit those without a known cause for approval by an authorised person.
- Classify the causes: unrecorded movement, misplacement, unit error, damage or loss. If the same class recurs at the next count, there is a gap in the process.
- Update movement recording rules where needed; for example, create a separate movement type for samples.
- Put the date and scope of the next count in the calendar now.
A short example: a wholesaler with two warehouses
A wholesaler’s main warehouse and branch warehouse hold the same product groups. At the year-end count, one product group shows a shortage in the main warehouse and a surplus in the branch. Overall, the difference is almost negligible. The investigation shows that a transfer between the two warehouses has been recorded as a dispatch at the main warehouse but not yet as a receipt at the branch. If the count had been read only warehouse by warehouse, nobody would have noticed that the two discrepancies explain each other, and separate adjustments would have been entered for both. When there is more than one warehouse, discrepancies need to be read by warehouse and transfer, not just as a total.
Excel and paper counts: when are they enough, and when not?
In a single-warehouse business with few products, a printed count sheet and an Excel spreadsheet do the job. It is easy to put the count sheet next to the system quantity and find the discrepancy. In businesses with many items or more than one warehouse, however, the sheet does not stay up to date, movements during the count are not entered in the spreadsheet, and the movement that caused a discrepancy has to be traced back after the fact. A spreadsheet records the count but does not show the movement history.
How is a count verified in KurumsalPortal?
In the Inventory & Warehouse Management module, products are defined with category and barcode information, and receipts, dispatches and transfers between warehouses are written to a single movement ledger. Warehouse counts are verified against the records, and products that fall to a critical level become visible. Your team still does the count; the module puts the count result next to the records and makes it easier to trace which movements led to a discrepancy. Which barcode scanner and hardware will be used is agreed during the project.
The module shares the same user, permission and notification infrastructure as the other modules of KurumsalPortal; who can do what is defined during set-up. If you want to follow your stock movements, multiple warehouses and count verification from one screen, see the Inventory & Warehouse Management page.
Frequently asked questions
How often should a stock count be done?
The frequency depends on the value of the product and how fast it moves. Many businesses count the whole warehouse at year end and count valuable, fast-moving products separately at shorter intervals. Adjust the frequency by looking at where count discrepancies appear.
What is cycle counting?
Cycle counting means counting product groups or shelves in turn throughout the year instead of counting the whole warehouse at once. It does not require closing the warehouse and catches discrepancies earlier; however, the count schedule and who counted what must be kept on record.
Should warehouse movements be stopped during the count?
If possible, yes. If receipts and dispatches continue, movements after the count starts should be marked separately and added to the count result afterwards. Otherwise the same product is both counted and recorded as a movement, and a discrepancy appears by itself.
How is a count discrepancy corrected?
First the cause of the discrepancy is investigated; if no cause is found, a stock adjustment is entered with the approval of an authorised person. The reason for the adjustment and the approver should remain on record, so that the same discrepancy can be questioned again at the next count.
Can you do a stock count with a barcode scanner?
Yes. When products are identified by barcode, a scanner speeds up the count and reduces typing errors. In KurumsalPortal, products are kept with category and barcode information; the scanner and hardware to be used are agreed during the project.
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