Range decisions from recount results

The recount is over and the results list is in your hands. Most people open it for one question: what is missing? In fact the list says far more about the shop. Which goods run out within a week, which sit gathering dust for months, and where money has got stuck. Put the balances next to sales and the count result becomes a range decision: what to buy more of, what to cut back and what to drop altogether.

Which numbers you need

Four pieces of data per position are enough:

• the physically counted balance (in pieces or an agreed unit);
• cost price in so'm;
• sales for the last 90 days (exported from the till or the accounting program);
• the date of the last sale and the last receipt.

Take the counted balance, not the book one: if the books are wrong, the decision will be wrong too. Export sales for at least three months. A single week of data shows only random swings.

How many days the stock will last

The key measure is simple: divide the balance by average daily sales. The result shows how many days the stock will last. An illustrative example from a household-goods shop:

• thermos flask: balance 120, 270 sold in 90 days, which is 3 a day. Stock 120 ÷ 3 = 40 days;
• set of glass tumblers: balance 60, 18 sold in 90 days, 0.2 a day. Stock 300 days;
• electric kettle: balance 4, 60 sold in 90 days, about 0.67 a day. Stock 6 days.

If you look only at the quantity, the kettle looks "low" and the thermoses "plentiful". In reality the thermos is fine, surplus money is stuck in the tumblers, and the kettle will be gone from the shelf within a week.

Four groups

Split positions into four groups by the number of days. Set the boundaries yourself: they depend on the type of goods and the supplier's lead time. For example, if an order takes two weeks to arrive, a stock of under 14 days is already risky.

1. Risky: stock shorter than the lead time. Order urgently and enlarge the batch if needed.
2. Normal: roughly 30 to 90 days. Leave alone.
3. Slow: roughly 90 to 180 days. Cut the next order, move the item to a more visible spot or review the price.
4. Stuck: more than half a year with almost no sales. This needs its own plan: a discount, a bundle, a return to the supplier or a transfer to another branch.

Gather the outcome in one table: position, balance, days of stock, group, decision, owner and deadline. If even one row in the "stuck" group has no decision written down, the table is not working: the list was drawn up but nothing changed. Name the owner as a person, otherwise the thought "someone will deal with it" calms everyone down.

See the frozen money in so'm

An amount in so'm speaks louder than a percentage. There are 60 of the tumbler sets above at a cost of 85,000 so'm each: 60 × 85,000 = 5,100,000 so'm. That money sits on the shelf, takes up space and stops you buying something new. Add up the cost of the "slow" and "stuck" groups and divide by the total value of the stock. Suppose 40 million so'm of a 240 million so'm stock is standing still. That is about 17 per cent, so one so'm in six is not working. With a figure like that it is much easier to argue for cutting an order.

There is one more useful cut: positions where the shortage repeats. If the same item is short every time, that is a question of placement and control rather than range. Moving it nearer the till or to a shelf that is always in view can help.

What to check before deciding

• Allow for the season. A heater that sells slowly in summer is not at fault; that is the season. Compare with the same period last year, not with the neighbouring one.
• Do not rush to judge new items: a position that arrived two weeks ago has no sales history.
• If the item was off the shelf for a month, low sales do not mean low demand.
• Compare the results of at least two or three recounts: a single picture may be chance.

Conclusion

Do not read the count result only as a list of discrepancies. Balance, cost and sales together show which goods earn money. The Pereuchet team hands over the actual balance for every position as a ready file for Excel or 1C, and you can continue the calculation above from it with your own sales data.