Forecourt Trader - 30 years at the heart of the fuel retailing community

Money Talk: Make sure you take time to take stock

Sometimes it comes as a bit of a shock to end up discussing something as basic as stocktaking with a retailer. We all tend to assume that the principles of stock management including knowing how much stock is really there are so fundamental to any sort of retail activity as to be beyond the need for explicit discussion. Yet it happens typically when we've just produced a set of accounts using the first real stock figures after months (sometimes many months) of book or system stock values.

The usual outcome is one or more sales groups suddenly showing a large loss and everyone tries to work out when and/or how it happened. Words including 'horse' and 'stable door' spring to mind.

Many retailers will happily go for months relying on their POS/BOS/accounting software to produce stock values for them, without bothering to go out and count the stuff in the shop and storeroom to overwrite the book stock values on the system with actual, physical figures. It's easy to understand: after all, one of the original attractions of computerised stock systems when they appeared in the forecourt sector some 25 years ago, was that they promised detailed and accurately valued stock figures at the touch of a button, at any time, without the drudgery of having to stop selling and count anything. And, used properly, these systems will, of course, deliver on those promises. The key to proper usage is that not only do you have to ensure that both deliveries received and goods sold transactions are accurately entered into the stock system, but that the book figures that the system produces are checked and, if necessary, amended at regular (and that really means frequent) intervals. If that correction against physical counts isn't performed then the system will continue to generate notional stock figures that are further and further removed from reality the longer that trading continues.

In principle it's just like the bank account in your accounting application. You start with (hopefully) an accurate opening bank balance that matches your bank statement. You make sure that all of the cash received and spent is entered into the system; at any given time the system will tell you what your bank balance should be. But at regular (surely frequent?) intervals you still need to match what the system is telling you to whatever the latest bank statement says; and if you find that there's either more or less in the bank account than the system tells you should be there, you'll presumably try quite hard to find the difference. Almost invariably it won't be the bank statement that's wrong although that's not impossible,of course, and you'll have to reconcile your system's running book balance so that it reflects what is actually in the bank account. If you know that you have to do it with cash, then why treat stock any differently?

A funny thing

It's a funny thing really. Our clients in the hospitality trade mostly still don't enjoy the full benefits of computerised stock systems in the same way as petrol retailers. Yes, there are some good stock management and reporting systems in the pub and restaurant trade, but the majority of those aren't directly electronically linked to either the drink dispensers (think fuel pumps) or the bottles/barrels in the cellar or fridge (think petrol/derv tanks). They mostly depend on manual data being entered from the sales and purchases systems. And most importantly they depend on a specialist stock-taker (usually independent of the business) coming along at regular intervals and measuring/counting/valuing the actual physical stock before entering actual values into the stock system. At many establishments the same stock-takers will often go on to produce a reconciliation between recorded sales and stock movements: in effect a sort of combined wet-stock reconciliation and GP percentage report, between stock takes, based on the stock-count they've just performed. And these visits aren't just annual: a large proportion of pubs, restaurants and hotels will have a full 'deficiency stocktake' (as it's known in that trade) report produced at quarterly intervals; quite a few don't like going more than six or eight weeks between stocktaking visits.

Quaintly old-fashioned

To many modern petrol retailers this may seem quaintly old-fashioned. The idea of having someone come in and actually count items just to update the computerised stock records can seem like defeating the point of having the stock system. And credit where it's due: many retailers, of course, do count some of their shop lines at very frequent intervals tobacco and scratchcards daily, for example. But it's the other areas of the forecourt shop where relying on rolling book stocks can lead to some unwelcome shocks when stock is finally counted grocery lines, for example. Not only are groceries somewhat perishable in the first place, but many items don't come in easily scanned packages, and it's not as if tins of beans, loaves of bread or bottles of milk are so valuable individually, is it? So there's a natural temptation to just avoid having to count and value them all. But even assuming just the natural wastage of sell-by dates or stuff dropped on the floor, if you leave the grocery lines uncounted for a year you might be very (unpleasantly) surprised at how far out your book stock could be when you do eventually get around to a physical count.

Some well-known petrol retail networks have been known in the past to engage external stock auditors to spot check stock and correct the system records out at individual sites so that head office can rely on the trading figures and asset values they were receiving. Old fashioned as it might seem, perhaps a few more petrol retailers might take a tip from those networks or even from their friendly local pub landlord and go back to actually counting some of their products more regularly.

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Weekly retail fuel prices: 18 September 2017
RegionDieselLPGSuper ULUL
East120.75128.55119.84
East Midlands120.29128.81119.63
London120.7558.57130.05119.82
North East120.2059.90129.98119.40
North West120.52128.62119.81
Northern Ireland119.2369.90126.85119.03
Scotland120.60128.18119.75
South East121.03130.63120.24
South West120.75129.31119.96
Wales120.35127.44119.57
West Midlands120.4262.90130.69119.84
Yorkshire & Humber120.1971.90128.67119.59

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