What is Stock Take in Retail - Retail Store Operations

WHAT IS STOCK TAKE?

The activity of physically counting the stock to know the actual amount of stock in hand is called Stock Take in Retail store operations

WHY IS THE PROCESS IMPORTANT

Stock take is done to bring out the variation in stock between the actual stock at hand versus the book stock( stock in the system)

• Variation can result in excess/shortage of inventory
• Store must analyze the discrepancy and take corrective action
• The discrepancy of count adversely affects stores profitability
• Hence, it is important that the stock take activity is carried out accurately

STOCK TAKE OVERVIEW

A 100% stock take i.e. complete audit of the physical inventory (PI) for each retail store must be conducted to control and measure the shrinkage. This is done as per the pre-stock take schedule circulated by the zonal stock controller (ZSC) for each stocktake cycle

- Each cycle= 4 months

Store manager and stock auditor/ assistant stock auditor from Third party services (TPS) is responsible for its successful completion

On the scheduled day, stock take must:

• Start after the store is closed for the day
• Be completed before start of business the next morning

After the completion of stock take process, the following must be carried out within 2 days:

• Investigation of discrepancies
• Correction of book stock balances

HOW DO WE DO IT

The stock take process is classified into five major parts:

• Planning and scheduling
• Pre-stock take process
• Stock take process
• Post stock take process
• Shrinkage/ variance reporting

PLANNING AND SCHEDULING

Planning of stock take/audit of physical inventory (Pl)

- Zonal Stock Controller - Prepares the prescribed stock take schedule by the first week of the previous month based on

• Store location and carpet area
• Holiday list
• Planned promotional activities days

A draft of the schedule is circulated to the Business Manager, Area Manager, Store manager

Planning of stock take/ audit of physical inventory (PI):

The store manager (SM) must revert confirmation on receiving the draft. In case of constraints, the store manager: Request for change of schedule with valid reason. This must be done within 10 days of the schedule being received i.e. no later than the middle of the month

The zonal stock controller must: Re schedule the store's stock take activity and circulate the final schedule on the prefixed day of the month

PLANNING AND SCHEDULING

Planning of stock take/ audit of physical inventory (PI):

- Once the Store Manager (SM) receives the final schedule, an exhaustive merchandise category (MC) list is shared with the zonal stock controller (ZSC). ZSC in consultation with SM must:

• Decide on day-wise MC schedule
• Share it with all concerned at the start of the month

It is the responsibility of inventory audit services (IAS) to audit and ensures that all MCs are covered in the stock take. ZSC must send manpower and equipment allocation plans to the SM. This must be circulated to all concerned after confirmation from the SM

PRE-STOCK TAKE PROCESS

Preparation of location map and location barcodes:

Zonal stock controller (ZSC) ensures that the location barcodes are printed and sent to the store at least 2 days prior to stock take

Store manager ensures that the location barcodes received from ZSC are affixed at appropriate locations prior to stock take - This is done under the asst. stock auditor's (ASA)supervision

The location barcodes must be noted in the location control sheet. This sheet must be handed over to ASA along with record of all damaged barcodes. Zonal stock controller ZSC must send a reminder regarding the pre-stock take checklist to the store manager (SM) - This is done at least 7 days prior to stock take

The store warehouse manager must ensure that all line items mentioned in the following registers are completed and checked

• Saleable returnable register
• Saleable non-returnable register
• Saleable inward and outward register

The store manager (SM) ensures that all damaged/ defective/returnable merchandise have been returned to the vendor/distribution center/ store. If not, the details of all such merchandise must be recorded in:

1. Returnable gate pass stock count sheet
2. Damaged/ defective sheet

This must be validated by the asst. stock auditor atleast 2 days prior to the date of stock date. All such damaged/ defective/ returnable merchandise must be segregated and kept aside. Details of all merchandise outwarded from the system but lying at the store must be entered in the pending physical returns to vendor (RTV) / outward stock count sheet. This merchandise must be kept separately and not be included in the stock take activity

Store Manager (SM) ensures that all the stores merchandise on the shop floor and store warehouse, have a barcode (EAN=European Accounting Number) affixed on it. This must be done at least 5 days prior to the stock take

Appropriate barcodes must be found for all stocks without barcode. If the stocks do not have the barcode:

• They must be listed in the merchandise without barcode sheet
• This merchandise must be kept separately in the clearly demarcated area
• Respective categories must provide the relevant barcodes

If the stocks have more than more barcode, the following has to be done

• A list of all such merchandise/ brands is made
• This is shared with the stock audit team before the stock take activity starts
• The stock audit team is also informed about correct barcode (out of the multiple) that be scanned

Pending GRNs for merchandise that has been physically received: Must be listed in pending GRN stock count sheet. This merchandise to be kept separately and not be considered for stock take

Store warehouse manager must ensure: That all merchandise in the store warehouse is properly arranged brand-wise/ merchandise category (MC) wise at least 3 days prior to the stock take. The brand-wise/ MC-wise and day-wise cartons are packed with pre-count labels pasted on it. The labels must have the global count details

The barcodes for cartons with a single SKU must be mentioned on the pre-count label facilitate bulk scan. Stock audit team must check the global count randomly for at least 20% of such cartons with single SKUs

Store manager must ensure: That all manual cash memos have been uploaded in the system and details of the same have been updated in the manual cash memo pending updation sheet

The store warehouse manager ensures:

• That all the merchandise physically received at the store must be inwarded in the system and GRN completed by the end of the day
• That receiving of stocks ( except for Food Bazaar) fromDC/vendors is stopped at least 1 day prior to stock take
• All categories must be informed well in advance and receiving of stocks for food Bazaar is stopped by 4 pm on stock take day

Exceptional deliveries - Any delivery received beyond the cut-off date and timings must not be inwarded in the system. These must be clearly demarcated,kept in a secure location in the store warehouse and these are recorded in pending GRN stock count sheet.

The store manager must: Ensure that all shop in shop (SIS)/on arrival (OA)merchandise is clearly segregated as these do not form part of stock take. Ensure that the store has colored stickers available for use as part of the stock take activity

The colors of the stickers are meant to indicate the day the stock was counted - Sign off on the cut off and count list sheet prepared by the store team on a daily basis. Also sign off, along with the stock auditor, the document for store readiness before the start of the stock take process

All documents relating to this process must be preserved until the conclusion of the next take. This must be shared with the stock take team as and when required

Team-wise scheduling:

Store Manager (SM) must: Provide staff details in the manpower control sheet to the stock auditor so that the team-wise schedule can be prepared

This is done at least 3 days prior to stock take

• Nominate a store supervisor to supervise the stock take activity
• Housekeeping staff is also provided to assist the stocktake team

SM/area manager must ensure that: The proposed availability of manpower is consistent throughout the stock take period for the store and trained manpower is available for the process.

While preparing the team-wise schedule, it must be ensured that the person conducting the global count for a section, does not scan the same section
For Ex: Store staff responsible for safe of a category, may do a global count for that category but will not be allowed to scan the stock of that category

For high-value SKUs ( eg watches, sunglasses etc) - As an exception, well-trained staff of that section/department may do the global count. The counting and scanning is done under the supervision of the asst. stock auditor. The consent of the zonal stock controller and the SM is a must for such exceptions

Stock take team briefing:

Store Manager (SM)/Asst .store manager (ASM) must brief the team prior to stock take commencing. The brief must include the following

• No movement of stock between back and floor when the physical inventory process is on
• Attendance/manpower availability check
• Distribution of control sticker/makers
• Query resolution

The asst. stock auditor must also brief the team about thephysical inventory (PI) process on the following:

• Team- wise schedule distribution formation
• Distribution and updating of global count sheet
• Distribution and updation of user control sheet
• Distribution and handling of HHT ( hand held terminal)
• Instruction for handling shortage/ excess
• Docking of scanned records at regular intervals
• Query resolution

Global count and handheld terminal (HHT) distribution:

Stock auditor/asst stock auditor is responsible for directing the store staff responsible for counting to their designated locations. After completing a location, the count is updated in the global count sheet

The asst. stock auditor must:

• Ensure that the location-wise global count sheets are collected from the team members
• Enter the location and global counts for each user and handover the HHTs to the user
• Accessories allocation

Troubleshooting: Hand-Held terminal (HHT)

Scanning: The user must scan the location assigned to him and not any other location. For each location: First scan the location barcode and then scan the merchandise available at the location

The scanning member must ensure that the merchandise found without barcodes must: Have a colored sticker pasted with the letter 'W' (for without) and location number mentioned on it and it should be segregated and handed over to the asst. stock auditor who will, Inturn, hand it over to the store supervisor

STOCKTAKE PROCESS

Scanning: The 'invalid' merchandise identified through the hand held terminal's beep, must be: Placed on the last shelf of that location and should be labeled with letter “I” followed by the location number by the scanning staff

Once the scanning is complete and no shortage/ excess is encountered:
The staff must close the location and move to the next location to scan the merchandise. In case of shortage/ excess, asst. stock auditor must be called for help.

In case of shortage/ excess, the scanning member must redo the global count to double-check the actual physical quantity under the asst. stock auditor's supervision.

If the physical stock is less than the global count: Using the admin password, perform a ‘short close' in the handheld terminal (HHT) and this must be noted on the user control sheet.

In case the physical stock is greater than the global count: an An'excess close’ must be performed in the HHT and this is noted in the user control sheet. Once scanning at a location is complete, a colored sticker must be put on the location barcode

The sticker must cover the entire height of the barcode. This ensures that the barcode cannot be re-scanned

Once scanning for a set of 5-10 locations is complete, the scanning member must: Bring in a handheld terminal (HHT) for docking. Bring in merchandise without barcode and user control sheet

Completion of the physical inventory (PI)/ stock take activity for the day:
Once the scanning is completed for all the assigned locations. The scanning member cross-checks to ensure that each location scanned has been marked with the appropriately colored sticker.

The store supervisor submits merchandise without barcodes to the store manager for immediate resolution( on completion of the day's stock process). The store manager ensures resolution on the above within 24 hours

Completion of the PI/ stock take activity for the day:

The asst. stock auditor must: Generate a report for merchandise erroneously scanned on the current day instead of the day that was scheduled for it. Forward this report to the store manager (or the person appointed by him)

The stock auditor must: Get a sign-off from the store manager ( or the person appointed by him ) on completion of the day's physical inventory (PI) activity

Revalidation of invalids: 

The store staff must go to the physical location where the article is kept and check for merchandise with multiple barcodes

If found: The staff member gets the correct EAN/ article of the merchandise and notes it against the wrong EAN. The store supervisor sends the details to the stock analyst in FKS within 48 hrs. Inwards/ outwards of merchandise starts only after consultation with the zonal stock controller

Shrinkage report and store scorecard:

The zonal stock controller (ZSC) must finalize the shrinkage/ variance report and hand it over to the concept CFO for posting. The shrinkage report is shared with the store manager (SM), area manager, and business manager. 

ZSC must evaluate the audit report and prepare the stock scorecard for the just concluded stock take activity. This is circulated after the end of each stock take cycle to the:

• Store Manager
• Area Manager
• Business Manager
• Concept CFO(Chief Finance Officer)

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