What are Inventory Audits?

Inventory is a critical asset for an organization.  It is this stock inventory maintained by an organization - either with itself or in its distribution network that eventually translates into sales.  While companies do keep track of the stock on a regular basis by maintaining records, they need to periodically assess and reconcile these records to check the accuracy of books and take the necessary corrective measures where required.  This is done by undertaking a stock audit.  

A stock take is essentially a physical count of the stock that is maintained at a particular place at a particular point of time.  This place could be the warehouse of a brand, a distributor point or at point of sales of a retailer.  

 The complexity of a stock audit increases with the number of locations that need to be audited, the total count of stock that is available and the number of SKUs which constitute the stock.  

Depending on the industry and objective with of the audit, the following can be checked as part of a stock audit:

  • SKU-wise number of units (stock count);
  • Details of products - For e.g. IMEI No., Serial No.;
  • Valuation of the stock; and
  • Deviation of stock from the books.
While the popular notion is that stock audits are conducted for one's own stock, it is quite common for brands to conduct stock audits and distributor and retailer points.  This gives brands insights into the stock at the secondary and tertiary levels, especially in cases of claims against price drops of products.

Topics: Mystery Shopping & Audits

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