Updated: 15/01/2022
1.Gross profit and margin control
Stocktaking brings gross profit and margins under strict control.
In these times of ever increasing costs, a successful hospitality operator relies on several factors to keep tight control over gross profit and margins. One of the most important of these factors is control over the efficient replenishment of stock. That’s where proper stock control management is key to success and a professional stocktaking service is of prime importance. And with the increasing likelihood of longer opening hours and the employment of more staff to cope with them, stocktaking will assume an even greater role in the future.
No business is too small or too large for stocktaking. Even the smallest village tenancy can benefit from the advice and expertise that a stocktaker can offer. Sadly, small and medium sized businesses (SMEs) tend to avoid paying for regular stocktaking. Often when the end of the year comes around the corner they will be shocked to hear their accountant say that their gross profit is 3 to 4% lower than their selling prices were geared to show.
A stocktaker is able to point out to you in real-time when profit margins are not up to expectations. Even if you only had a quarterly trading account prepared by your stocktaker it would give you more timely warning of poor performance. You would also find the VAT and Inland Revenue Inspectors are much happier to accept accounts that are backed up by a full regular stocktaking report prepared by a reputable company.
2. Safeguarding against theft and fraud
Stocktaking safeguards your business against the likelihood of theft and fraud. It also safeguards you in regards to insurable commodities, should your business fall victim to internal theft or fraud.
Proper stocktaking benefits businesses by setting in place controls and procedures which aid the security of both stock and cash. These controls and procedures become direct deterrents to staff who might be contemplating theft or fraud. Not only that, stocktaking has the added benefit of acting as a simple check on the honesty of your staff.
If performed regularly, by professionals who are adept at spotting unusual trends, stocktaking can flag up any suspicious stock movements or results. The power to escalate such suspicions early on can be the difference between a simple disciplinary process or an arduous and expensive court case later down the line.
In larger premises the need for regular stocktaking is therefore even more vital. Dealing with large numbers of staff means that the need for constant supervision and control is all the more necessary.
A stock shortage could be caused by a number of reasons, the most common of which are:
- Theft of stock or cash
- Undercharging or not charging for drinks
- Short deliveries
- Stock wastage
- Incorrect analysis of takings or claims for allowances
A professional stocktaker will provide deeper insight as to which of these causes affect the stock shortage in your stock control management system the most. They will also offer helpful advice on the best methods to combat them. This will often include the introduction of new procedures for:
- Goods received and returned
- Issuing and control of stock from cellar to bars
- Chargeable containers
- Tills and cash
- Allowances for beer wastage
- Promotions
- Retail sales
- Food stocks
etc…
Specialist stationery to aid the stock control management process can also be provided.
As mentioned before, not only does stocktaking benefit as a preventative method against theft, it also spots theft and offers worthwhile benefits post-theft too. In the unfortunate case of theft or fraud going undetected, stocktaking ensures that you have the necessary proof to reclaim any lost stock through your insurance company. You would have a hard time proving how much of your stock had been stolen unless you had the necessary documentation to prove it. Up-to-date, externally validated and verified valuations of stock give you a much stronger position for reclaiming any stock that is lost through theft via your insurance.
3. Analysis on stock versus consumption
Regular stocktaking data provides the basis for comparative analysis on stock levels versus consumption levels.
A full extended computerised stock result following a stocktake will provide invaluable information for the owner or manager of an establishment. As well as showing an actual cash shortage or surplus and gross profit, it will also highlight over-stocking and slow moving lines. Therefore helping to establish ideal re-ordering levels.
Most importantly, however, the modern stocktaker can pinpoint exactly where shortages are occurring by analysing the PLU sales from the tills and by drawing a direct comparison with their calculated sales. A PLU variance report will show you on a line by line basis exactly where discrepancies are occurring.
4. Reduction of stock holding
Stocktaking will point out where stock holding can be reduced, freeing up previously tied up cash.
Achieving optimal stock levels versus consumption levels will ensure stockholding is kept to a minimum at all times. Reducing stock holding is important as it ties up cash and reduces potential losses. This is particularly relevant on draught beers and other products that have relatively short best before dates.
As a rule of thumb, stock holding on draught beers should be no more than seven to ten days maximum and packaged beers, cider and minerals should be no more than 14 days. Operators can use Venners stock sheets to highlight potential problems with stock holding. The result summary shows stock holding by section and if any section shows up as being high they can then look through the results detail pages which show stock holding by individual product.
5. Improved working conditions
Stocktaking will uphold required working conditions, such as a tidy, organised and efficient operational working space.
Operational efficiency relies on clear and organised work spaces. Stocktaking provides the data necessary to keep stockholding to a minimum at all times. This means that the space you have in your establishment is utilised as effectively as possible. More space means better movement in the venue for your staff (with automatic health and safety benefits), as well as better oversight of the stock holding areas, such as the cellar and fridges.
Instead of employees having to search through stacks of unused (and possibly out-of-date stock), they can find the next batch of stock as required easily. Not only that, it will make it much easier to keep all stock holding areas hygienically clean.
Conclusion
Stocktaking is foundational to stock control management. It provides you with the information you need to run a profitable and operationally efficient business.
A good stocktake report will include: cost prices from supplier invoices, selling prices based on price tariffs and wine lists, opening and closing stock figures, purchases and sales for each individual stock line, the value of sales at cost and selling price, gross profit percentages achieved on each stock line and the number of days stockholding.
Speak to us today about our services and start benefitting from stocktaking today!