Top 10 Reasons for Stock Variances

Frank Hayward's picture

Below you can find a list of reasons for stock variances. By checking each item on this list - you should be able to solve the mystery. The list has been created in order of likelihood with the most likely reasons at the top. Click read more to see the list below.

The formula to work out what you actually used is

Opening Stock + Purchases + Net Stock Movement - Closing Stock = Actual Units Used

1) Incorrect Counting

If your opening stock or closing stock is incorrect, then your actual units used will be incorrect. Recount your stock. Pack fridges neatly so that counting stock becomes easy. Be careful of having single cans of coke at the back of the fridge where they cannot be seen. Remember that if your closing stock is captured incorrectly, it becomes the opening stock of the next day which will make the next day's stock take also not balance.

2) Incorrect Purchases

Incorrect capturing of GRV's is the single biggest cause of stock errors and incorrect GP's. It is absolutely vital that both the quantity and the price of each stock item is always captured correctly. Remember - bad information in = bad information out and good information in = good information out.

3) Overtopping

If you are constantly short of a particular stock item, then the problem is usually overtopping. It can be a worthwile exercise to get each person in the restaurant to create 10 sample portions and weigh the total and divide by 10 to get an average. The results may surprise you. In almost every case, some staff will be overtopping and others won't. The investment in training will usually solve this problem.

4) Short Deliveries

When last did you check that the case of 24 coke cans actually had 24 cans inside it? 1kg packs of pre-sliced salami should have a certain number of slices in a bag, especially if you always use 8 slices of salami on a pizza. If the slices are suddenly cut thicker, then you could use up to 100% more salami. Are you getting 8 kg's of cheese in your 8kg box or does the box itself weigh 0.5kg leaving you with only 7.5kg cheese?

5) Mistakes with Manufactured Stock

If your brand has provided recipes for manufactured items, then are you making sure to tick the box that says 'use master recipe'? Make sure your batch quantities are correct. The batch quantity can be thought of as the number of times you are making the recipe.

6) Stock Locations

If you use stock locations, then you need to make sure that you have done your stock takes, purchases and stock transfers in the same location that you are running your report for. 

7) Stock Transfers

If you transfer stock between two or more stores, then those stores' locations need to have been flagged as 'external locations'. If you use internal stock locations, you must make sure that you are transferring correctly. For example if you are a multi-brand operation, one brands can of coke might be a different stock item to the other brands can of coke. If this is the case, then you cannot transfer cokes from one brand to the other because the cokes are different stock items in each brand.

8) Discarding Stock to Wastage

If you have stock that goes stale or is damaged and you discard it to the rubbish bin, this will show up as a variance on both the stock variance report and the gp report. If you use the facility to transfer stock to wastage then the stock will be considered 'accounted for' and will appear on the variance report in the net stock movement column. This will cause your variance report to only show variances of further unaccounted for stock. This activity has no effect on the GP report. The wasted stock will still appear as a variance on the gp report.

9) Incorrect Overring Procedures

When you cancel an invoice, Aura asks if the stock was wasted or not. You need to make sure that you are doing this correctly. If a pizza was dropped on the floor and the customer cancelled the order, were the drinks possibly put back in the fridge? If so, then overring the order and select the option 'stock was not made and wasted'. Then ring up the damaged pizzas again and discount them by 100% with the reason 'wasted'.

10) Recipes

For most of our customers who are part of a franchise group, the recipes are already entered for you. These are created by your brand in conjunction with Cosoft. Any mistakes found are always fixed very quickly and a new menu will be released to the group. It is therefore prudent to always activate new menus if Aura prompts you to do so. An incorrect recipe will have no effect on your actual units used or your actual gross profit. It will only affect the theoretical values.

11) Shrinkage

This is a last resort, but it is also a real possibility. I have listed this as an additional 11th option because before accusing anyone of theft, you should always eliminate all other possibilities. Are all invoices being rung up? If not, then you are loosing money as well as stock. Some clues of suspicious behaviour are:

  • Till drawers that are being opened with keys or are often left open after a sale is concluded
  • Locked till drawers that have scratch marks slightly to the left of the keyhole that can indicate that they are being forced open
  • Small denominations of coins lying around the tills. These can be used for change

Run the activity log report and look for the following suspicious behaviour:

  • Many abandoned orders
  • Many re-printed orders
  • Items being deleted off the invoices
  • A high number of voided items
  • Opening the till draw without doing a sale

It might be worth blocking cashiers from performing the above activities by using the access permissions section of Aura. If you want to still allow managers to perform these activities then you can enable the sms agent and configure it to secretly sms you every time someone performs a suspicious activity. Our helpdesk can help you to set this up.

Is stock going out the back door? Is the door locked? Have random searches been implemented?

Hopefully you can use the above tips to improve on your stock controls. The AURA POS system can easily fully pay for itself every year if you are using it to control your stock properly.

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