6 min read
The discrepancy that appears after a stock count is one of the most discussed and least investigated topics in business. The first explanation that comes to mind is usually loss or theft. In practice, however, most of the gap arises where goods physically moved but the record was not created at the same moment. The six sources below explain most of it.
1. Unrecorded issue: “I’ll enter it later”
The customer is in a hurry, the goods go out, the document will be written later. Sometimes “later” never arrives. Unrecorded issue is the most common source of the gap, and the fix is procedural rather than technical: goods do not leave the warehouse without an issue record. A mobile issue screen makes that rule enforceable — instead of waiting for a paper slip, the record takes twenty seconds.
2. Unit confusion: box or piece?
If the same item enters the warehouse in boxes and is sold to the customer by the piece, a gap is inevitable unless the conversion is defined in the system. Is a box of twenty deducted as twenty pieces or as one box? The answer must be explicit on the item record, and the unit used must be visible at entry.
- A base unit and pieces-per-box must be defined for every item.
- The unit used must be clearly visible on the entry and issue screens.
- Counting must use the same unit; counting boxes and entering pieces creates a gap.
3. Inter-warehouse transfers left half-done
Goods leave one warehouse but are never received into the other, or the reverse. A transfer should be held as a single record rather than two separate transactions: the issue and the receipt are created together and neither can be saved without the other. In businesses running multiple warehouses this single change noticeably reduces the gap.
4. Returns and exchanges going unrecorded
The customer brought the item back and another was given instead. Physically there were two movements, but if neither appears in the system, both stock and revenue are wrong. A return is not the deletion of a sale; it must be recorded as its own movement, stating whether the item is resaleable.
5. Production and assembly consumption not deducted
If material taken from the warehouse turns into a product, the consumed material must be deducted and the finished product received. Without those two movements, raw material looks abundant and finished goods look short. A bill of materials helps here: when the work order closes, consumption is computed automatically.
6. Samples, wastage and internal use
A sample given to a customer, a broken item or material the business uses itself also leaves stock — but because there is no sale, it usually goes unrecorded. Defining separate issue reasons for these movements both removes the gap and makes “how much did we write off this year?” an answerable question.
- Sample / promotional issue
- Wastage, breakage, spoilage
- Internal company use
- Replacement under warranty
Count cyclically, not once
A full count performed once a year only reveals the gap at year-end, at which point finding the cause is nearly impossible. Cycle counting instead — counting specific item groups in rotation at regular intervals — catches the gap while it is still small. If the system tracks which group was counted when, this stops being extra work.
In summary
A stock gap is a result, not a cause. Closing the six sources above brings the gap down to an acceptable level in most businesses. Technology alone is not enough here; but a properly configured system makes the right process practicable. At Denk Soft we define these movement types together with the business before configuring the stock module.