1. Introduction to Stock Control

2. Introduction
Efficiently controlling the inventory of a retail store is critical to the long term profitability and survival of the spa.
Retailers make a sizeable investment in the inventory they keep every day.
If this investment is not protected, the retailer may face financial losses that cannot be overcome.
There are many areas of inventory control that need constant attention.
From the daily delivery of merchandise to the annual stock-take, each aspect of the process is important and should not be overlooked

3. Control Inventory
Controlling inventory is a critical aspect of any spa’s profitability.
The process of buying, storing and selling products is the lifeblood of retailing.
The aim is to purchase products and then resell them at a profit within a reasonable time.
It sounds simple but, if the products don’t sell, become damaged, out of date or stolen the retailer has lost their original investment plus the profit a sale would bring

4. Control Inventory
Inventory is the largest single investment that a retailer makes.
As such it should be protected and regularly monitored.
A systematic approach to inventory control that uses detailed procedures will achieve this.
Provided all staff are aware of them and are trained to follow them

5. Stock Control Policies and Procedures
Procedures are usually implemented to ensure that everyone knows how to act in ways that help customers and improve the store’s efficiency.
Spa policies provide the written concepts that ensure staff are working efficiently by providing a basis for store procedures.
Procedures reduce any variation in the way that tasks are performed, regardless of who does them.
They also enable identification of problems and responsibility

6. Stock Control Policies and Procedures
If you analyse the activities in the spa, you often find that some tasks are being done in a haphazard way because staff are either unsure of what to do or they are doing things the way they think works best.
It is also possible that the staff’s ideas can be used when developing and implementing procedures.
As a manager, it’s your job to find the most efficient way of running the business.
You must show staff how to complete their tasks effectively, and guide them to the appropriate policies.
It is important that all staff have a clear understanding of what is expected of them and that they can follow prescribed procedures.
It is essential that managers provide these procedures.

7. Key Areas of Inventory Control
There are six key areas that you should be aware of to effectively control inventory. Each area should have a defined procedure.

8. Evaluating Store Policies
Using the inventory control areas, ask yourself, what is the store policy for:
Receipt of goods from suppliers. For example, what is the policy for any discrepancy between the goods ordered and the goods supplied?
Dispatch of goods inter-department or inter-store. For example, what is the policy on ensuring the safe movement of goods?
Shrinkage prevention. For example, what is the policy on preventing theft?
Waste controls. For example, what is your policy on recycling?
Safety controls. For example, what is your policy on staff safety in the dock area?
Secure storage. For example, what is your policy on securing goods after delivery?

9. Adjusting Store Policies
Look at the difference between the store procedures and the policies they were based on.
Do the procedures match the focus of the policy:
If you found discrepancies, what are the ramifications for the business?
How can you improve the consistency between policies and procedures?
Should you develop new procedures that are more consistent with the current policies?

10. As a manager your job relies on the efficient performance of your staff. It is important that you identify which procedures are being followed and which are not. Then you must uncover why that is happening

11. Receiving and Dispatching Stock
Receiving goods from suppliers is a fundamental part of retailing.
Due to the potential financial losses that can result, it is critical that staff follow the related procedures to ensure that this is done effectively.
While different procedures apply to different merchandise, the following are typical receiving and dispatch procedures.

12. Receiving Goods Goods have been ordered
Goods received agree with order and invoice quantity, description and quality.
Goods are not signed for before they are thoroughly checked
If invoice is not received with goods, there must be provision to process it in the correct manner when it is received
Goods are correctly ticketed and immediately placed on the selling floor
Pre-sold goods allocated for earliest possible delivery
Damaged or incorrect goods are rejected and arrangements made for immediate repair or replacement - delivery slip marked accordingly
Stock held in reserve promptly ticketed after inspection and carefully stored
Reserves are organised so that oldest items will be drawn first for the selling floor or for delivery
Daily Goods Received record kept and processed with all relevant invoices and/or delivery dockets
Receiving area kept clear at all times and rigid security adhered to

13. Dispatching Goods
Dispatch person alert to false or incorrect paperwork
Ensure customers are notified of impending delivery - address checked and any money collected carefully documented so driver cannot overlook it
Double check goods to be delivered are correct in quantity, description and quality
Damaged goods not dispatched unless agreement from customer
Regularly check loaded vehicles to ensure packing is satisfactory and only the items to be delivered are in the vehicle
Ensure you are satisfied with the appearance of the vehicle and the driver - they create a lasting impression
Maintain daily goods delivered records - ensure drivers sign for goods in good order and condition
All paperwork processed promptly

14. It is the manager’s responsibility to ensure that everyone adheres to the receiving and dispatching procedures. The process involved in receiving goods will vary from spa to spa.
The responsibilities of the manager and staff when receiving goods will also vary.

17. Developing a Flow Chart
Develop a flow chart showing the process used in your store when goods are delivered. Include the tasks carried out by both the manager and staff.
You will need to develop these flow charts in consultation with your staff to ensure that no details are missing.
Analyse the two charts and look for areas where the procedure that you carry out does not correspond to one that staff carry out. Are any of these procedures obsolete? Post your flow chart on the notice board for discussion

18. Product Waste and Workplace Safety
Disposing of the waste created by packaging and ensuring product safety are important aspects of a store’s inventory management system.
As a manager you are responsible for implementing the associated procedures and ensuring that your staff follow them.
Safety applies to both staff and goods.
Occupational Health and Safety legislation obligates employers to ensure the safety and well being of their employees.
This makes it your responsibility to provide sufficient training to cover situations where an employee’s safety may be compromised.

19. Safety and Wastage Controls
You and your staff must thoroughly understand the importance of waste and safety controls. Consider the following questions:
What areas of wastage require your staff to carry out specific procedures? For example, disposing of dated stock may require a staff member being solely responsible for monitoring it and completing relevant documents How do you ensure that staff follow the recycling procedures? Conduct an inspection to ensure that staff are aware of what to do with different types of waste. If there is no recycling system, how is waste disposed of? Who is responsible for stock safety i.e. preventing breakages? What are the consequences of not following these procedures? Who is responsible for implementing OH&S and auditing policies in relation to stock? How does this person ensure staff are following the procedures?

20. Safety and Wastage Controls
These questions will give you some direction when implementing effective waste and safety control processes.
The aim of waste control is to ensure that any waste created by packaging and out dated or damaged stock is minimised and/or disposed of properly.
Product safety is concerned with minimising the potential for hazards created by poor storage methods. Of particular concern is the possibility for chemical or toxic reactions that result from spills or leaks. To reduce this, ensure that Material Safety Data Sheets (MSDS) are checked before products are stored

21. Product Security
A major factor in effectively controlling inventory is to ensure that product security is well managed.
Carelessness in this area is unfair to staff because, apart from providing unnecessary temptation, innocent people may be wrongly suspected if cash or merchandise is missing. Key areas to consider are:
Shopstealing
Staff Pilferage
Operating the Point of Sale

22. Shop Stealing
The main aim in reducing shop stealing is prevention first then, detection, followed by apprehension as a last resort.
When apprehending an offender, you must be extremely careful. Staff should be trained in the correct procedure and the law before apprehension is attempted.

23. Staff Pilferage - Cash or Stock
There are many methods used by staff to steal. Some methods are:
Theft of cash from the register
Wearing stock out of the spa
Collusion with carriers to steal merchandise
Falsifying dockets and delivering stock to an accomplice
Sizable price cutting to friends and relatives
Arranging deliveries from suppliers against false dockets

24. Other areas of possible theft to consider include:
Receiving and dispatching goods
Goods taken without full payment
Cheque and credit card handling
Returns from customers and to suppliers
Repairs to manufacturers
Opening and closing the spa
Staff parcels and purchases
Receiving area security - back door security during daytime
Handling and storing confidential information
Burglary or smash and grab
Armed hold up
Banking and night safe procedures, transporting cash
Safeguarding keys, registering keyholders with police, fire brigade

25. Operating the Point of Sale
The POS procedures should include:
No staff member  to process their own purchases
Register operating practices to include - regular clearing, balancing float (in and out), voids, refunds, credit cards, cheques, exchanges, etc
Register closed and locked at all times when not in use and/or under surveillance
Register key security
Cash shortage and overage procedure
A good manager is always security conscious. Staff appreciate tight security because people prefer to work in an efficient spa.

26. Stock Losses or Shrinkage
Stock loss can be financially disastrous to a business. Procedures should be implemented at all levels of the company to minimise it. The size of loss your store suffers will vary depending on the goods you carry.
As a manager it is your task to ensure that staff understand the consequences of stock loss to the store, the customer and to themselves. Make sure they strictly follow related procedures by

27. Communicating with your staff individually or as a team
Communicating with your staff individually or as a team. Explain the importance of accurate stock control, highlighting the consequences of stock loss. For example, a less experienced staff member may not implement procedures because they are not aware of the gravity of their actions. If they forget to lock a cabinet, why they are not aware of the importance of that action?
Conducting periodic staff skills and knowledge sessions, or implement a “buddy” system where staff check each other’s knowledge

28. Causes of Stock Losses Stock losses are caused by:
Theft (by staff and customers)
Unrecorded discounts and markdowns
Damage to products resulting in markdowns – unrecorded
Careless price quotes resulting in lower gross profit than budgeted for
Merchandise on loan unrecorded
Merchandise out for repair unrecorded
Invoices from previous stocktake not processed
Errors in invoices not identified
Sales dockets not processed
Errors on stock sheets - additions, extensions, quantities, etc.
Stock missed when taking physical count
Credits passed, but goods not received
Bookkeeping errors and omissions.
Incorrect cut off points on receiving and dispatching
Incorrect treatment of undelivered sales

29. Causes of Stock Surpluses
Stock surpluses may be caused by:
Credits not passed on for goods received back
Bookkeeping errors and omissions
Overcharges
Errors on stock sheets (overstated)
Sold goods or lay-bys counted into stock in error
Incorrect cut off points on receiving and dispatching goods

30. Stock Control Policies and Procedures
Stock control is basically monitoring and managing the amount of stock either on the selling floor, or in storage at any given time.
It is very important that this is done efficiently because stock is the single largest asset of the spa.

31. The main purpose of stock management is to increase the store’s profit by ensuring that suitable levels of stock are in the spa at all times.
The policies and procedures used to accomplish this will vary depending on the type of store:
For inventory management to be effective, someone must be responsible for:
Setting appropriate policies
Establishing recommended inventory levels
Ensuring that control systems are functioning properly

32. Inventory Control
Although you implement the procedures and ensure that staff are carrying them out, do you understand the reasons behind the policies and procedures?
For example, a policy to monitor inventory levels is in place because insufficient stock limits sales and excessive inventories tie up money that may be needed some where else in the store.

33. In addition to knowing the reasons for the procedures,
It is your task to ensure that your staff also understand the importance of accurate inventory control. 
They need to understand the impact of their mistakes and work towards eliminating them as far as possible

35. Stock Movements
Stock movements are a constant activity in retailing. Stock must be moved in the most efficient way possible by following the spa’s policy and always considering the costs involved.
Costs related to stock movement include:
Transportation or freight charges
Lost sales if your store is missing stock
Storage costs
Disruption to the general activities of staff in store.
To minimise these costs ensure that stock is moved efficiently.
To achieve this:
Delegate the tasks
Know who is accountable for each task
Be certain that staff are doing their tasks efficiently.

36. Policy for Storage Area and Equipment
The storage area of your spa may be out of the customer’s sight but it is no less important than the shop floor. This area contains the stock yet to be sold. Its safety and maintenance should be a high priority.
Think about the stock storage areas in your spa. Are they disorganised because they are treated as less important than the shop floor?
The spa policy should cover the safety and maintenance of the storage area. It should include procedures to minimise:
Breakage
Damage
Deliveries left out on the floor
Product theft
If any of these things are currently happening in your storage area, then the spa policy is not being followed and this needs to be rectified quickly