One of the main issues faced by many store operators is the mismatch of the Inventory. Inventory discrepancy is the difference between the stock as per records and the physical inventory.

Store operators often face this issue and it has got multiple impacts on the business operations. It may lead to loss of sale, wrong stock replenishment, loss of revenue and profit, Poor customer service etc.

What are the causes for Inventory Discrepancy

Any discrepancy on the inventory can be of the following reasons

1. Errors in recording the Receipts or Sales

An inventory quantity can be wrongly entered while recording any Stock Receipts or Sales. Sometimes the error may of entering a wrong SKU thereby leads to the discrepancy of both the products.

2. Recording of Exchange/Damages

The exchange or returns made can be wrongly entered or sometimes the exchange may not be recorded at all. For example; A customer returns a product for a size change which has not impact on the pricings, may be missed out for recording the exchange by the store staff. Similarly non recording of damages also leads to inventory discrepancy.

3. Misplaced inventory or Wrong labeling

Products can be misplaced in the back rooms or in a wrong aisle or Shelf. Products will be available in the stock records, but could not trace the location. This can be even caused by customers picking the products and placed in different location. A wrong labeling also will lead to a wrong stock counting.

4. Shoplifting

Shoplifting or employee theft leads to the inventory shrinkage. This costs more than other discrepancies and it’s a direct loss to the business.

How can we solve inventory discrepancies

• Setting up a proper Inventory management software is the first and foremost solution to control the inventory discrepancy.
• Putin proper procedures and train the staff properly to ensure practices and processes are executed effectively.
• A good surveillance system in the stores can reduce the shoplifting and employee thefts.
• Labeling the products with adequate information like Barcode, SKU, Unit of Measurement etc to identify the products easily.
• Make it a practice for a random physical count on a daily/ weekly basis on selected products. This exercise may not give the complete accuracy, but will definitely throw light on some common mistakes which happens.

Learn from the mistakes and Store managers/owners should put in proper procedures to avoid any such occurrences. Once a discrepancy is found, it has to be recorded in the inventory system. An effective software solution will give you the provisions for this exercise and increase your sales and profitability. A cloud based solution can give more visibility to the store owners on a real time basis from any part of the world.

Image courtesy - https://virtocommerce.com/glossary/what-is-a-dead-stock