In short: the year-end stock-take does not go away, but it no longer has to be the only moment you find out what is on the shelf. If you count a few racks every day, by scanning and by location, you catch differences while they are small and find their cause. The annual count becomes a confirmation, not a surprise.
Why stock counts come out with differences
Differences do not appear on the day of the count but in the months before. The causes are almost always the same:
- Unrecorded moves: goods put “just until tomorrow” on another rack, without moving them in the system too.
- Receipts counted by eye: the quantity on the delivery note goes into stock without being checked piece by piece.
- Products swapped during picking: two similar items, the same box, a different product in the parcel.
- Returns and damaged goods: they come back to the warehouse without a document and stay in a corner.
- Different units of measure: the supplier ships cases, the system counts pieces.
- Corrections without a reason: someone “brings the stock up to date” to be able to invoice, and the trace of the cause disappears.
An annual stock-take finds the difference, but after a year nobody remembers where it came from.
Annual stock-take or counting by zone
A full stock-take, with the warehouse closed for a day or two, has one advantage: it is simple to organise. Otherwise it is costly: delayed deliveries, overtime and counts made in a hurry by tired people.
Counting by zone, also called cycle counting, splits the warehouse into small pieces and counts them in turn, during working hours. A few racks a day, at quiet times, so that every location is counted several times a year. Expensive or fast-moving products are counted more often, slow ones less often.
Your legal stock-taking obligations stay the same. Talk to your accountant about how periodic counts feed into the year-end stock-take; what matters is that you reach it with stock that has already been checked.
How to organise counting by location
- Split the warehouse into zones and set the rhythm. What is counted daily, weekly, monthly. The items that matter most, by value or by number of orders, come up more often.
- Count by location, not by product. Scan the rack, then everything on it. That way you also find products placed where they should not be, not just the shortages.
- Decide whether the counter sees the expected quantity. A “blind” count avoids the temptation to find the number in the system; a count with the stock shown is faster. Either way, the difference is recorded, not corrected on the spot by eye.
- Stop movements on the counted rack only while counting. A move made during the count spoils both numbers.
- Recount big differences. A second count, by another person, before any correction.
- Correct with a reason. Every correction has a reason chosen from a list (damaged, receiving error, picking error, misplaced) and stays in the item’s history.
What to do with the differences
Correcting the stock is the easy part. The value of counting by zone comes from what you do next:
- Keep a register of differences: each one has a status, an owner and a deadline, and old ones stand out.
- Look for the pattern: the same zone, the same product, the same shift, the same supplier.
- Link the difference to the last movement: the location’s history tells you who put or took the goods and when.
- Change the cause, not just the number: a missing label, two similar products on neighbouring racks, a rushed receipt.
Batches, serials and expiry dates
If you work with batches, serial numbers or expiry dates, count at that level, not just by product. Stock that is right in total but with the wrong batch on the shelf means the first customer who asks for a specific batch or serial will receive something other than the documents say. For products with a shelf life, the count is also a good moment to take out of available stock whatever has expired or is about to.
What you need in the software
- stock by location, not just by warehouse;
- barcode labels on every position;
- counting from a phone or terminal, rack by rack;
- corrections with a mandatory reason and full history;
- a register of differences, with an owner and a deadline;
- bulk corrections from a file, with a test run first, useful after a big count.
Without locations and labels, counting by zone is hard to keep up: there is nothing to split the work by. That is why, in a WMS project, coding the racks is the first step.
Frequently asked questions
How often should each location be counted?
It depends on the value of the goods and how fast they move. A starting point: important items monthly, the rest quarterly. Then adjust the rhythm based on the differences you find.
Does counting by zone replace the annual stock-take?
Not by itself. Legal stock-taking obligations remain; discuss with your accountant how periodic counts are used for the year-end stock-take.
Who should do the counting?
Ideally someone other than the zone’s storekeeper, at least when recounting big differences. It is not about trust, it is about a second pair of eyes.
What do you do with goods found on the wrong rack?
Move them to their location by scanning and record the difference as a storage error, not as a separate shortage and surplus. Otherwise the total stock looks right but the cause disappears.
In DataFlows Depo you scan a rack, see what should be on it and correct differences with a reason, from the phone, and every difference goes into a register with an owner. Write to us if you want to see it on your warehouse.
