Recording Stock Levels

Recording stock levels is a fundamental part of inventory management. It involves tracking the quantities of materials or goods on hand at any given time to ensure sufficient supply, prevent shortages, and support accurate financial reporting. Accurate stock records enable efficient purchasing, control over resources, and reliable production planning.

1. Importance of Recording Stock Levels

  • Ensures Inventory Accuracy: Provides real-time knowledge of stock availability.
  • Supports Reordering Decisions: Helps identify when to reorder and how much to purchase.
  • Facilitates Cost Control: Reduces losses due to overstocking, understocking, theft, or spoilage.
  • Improves Operational Efficiency: Enables smooth production scheduling and order fulfillment.

2. Methods of Recording Stock Levels

A. Perpetual Inventory System

  • Description: Continuously updates stock records with every transaction (e.g., receipts, issues).
  • Tools: Barcode scanners, inventory management software, integrated ERP systems.
  • Benefit: Provides real-time visibility and reduces stock discrepancies.

B. Periodic Inventory System

  • Description: Physical counts are conducted at regular intervals (monthly, quarterly, annually).
  • Tools: Stocktaking sheets, physical count reports.
  • Limitation: No real-time updates; higher risk of discrepancies between actual and recorded stock.

3. Documents Used to Record Stock Levels

  • Bin Cards: Physical cards kept at the storage location recording quantity received, issued, and balance for each item.
  • Stores Ledger: Maintained by the accounting department to record quantities and values of all inventory movements.
  • Goods Received Note (GRN): Used to update stock upon receiving materials from suppliers.
  • Material Requisition Note (MRN): Authorizes the issue of stock to production or departments.
  • Stock Issue Note: Confirms the actual release of stock from the store.
  • Stocktaking Reports: Used to compare physical count with recorded balance and identify discrepancies.

4. Technology in Stock Recording

  • Inventory Management Software: Automates stock level updates, reorder alerts, and reporting.
  • ERP Systems: Integrate inventory with purchasing, production, and sales data.
  • Barcoding and RFID: Enables fast and accurate tracking of stock movements and locations.

5. Reconciliation and Audit

  • Regular Stocktakes: Periodic physical verification ensures records match actual quantities.
  • Variance Reports: Investigate and explain discrepancies between recorded and physical stock.
  • Internal Controls: Authorization, segregation of duties, and proper documentation strengthen inventory accuracy.

Strategic Value of Accurate Stock Records

Maintaining accurate stock levels is essential for business continuity, financial integrity, and effective decision-making. It enables timely replenishment, reduces costs, and enhances customer satisfaction through reliable product availability and order fulfillment.