～Learn the common stocktaking pitfalls that can affect gross profit calculations, inventory loss analysis, and SKU-level product management for retailers in Vietnam.～
Common Pitfalls in Stocktaking
Stocktaking plays an important role in retail operations. Its main purposes include supporting financial closing and profit determination, improving inventory management, and helping businesses identify and control inventory loss. However, even when a physical stocktaking process is conducted accurately, the results may not be fully reliable if the underlying inventory data and daily store operations are not properly managed.
For retailers in Vietnam, where modern retail formats such as convenience stores, supermarkets, specialty stores, and shopping malls continue to grow, accurate stocktaking is becoming increasingly important. Demand fluctuations driven by Tet holiday demand, tourism, public holidays, seasonal campaigns, back-to-school periods, year-end promotions, and major shopping events can place additional pressure on inventory management. For this reason, stocktaking should be viewed not simply as a counting exercise, but as a management process that supports inventory accuracy, financial reporting, and operational decision-making.
１．Pitfalls in Financial Closing and Profit Determination
After completing a stocktake, companies may sometimes discover unusual fluctuations in their overall gross profit margin. In such situations, the first reaction is often to question the stocktaking results. However, discrepancies are not always caused by the physical inventory count itself.
When using the retail inventory method, profit determination requires more than beginning and ending inventory figures. Retailers must also maintain accurate records of purchase costs, purchase quantities, sales transactions, and returns throughout the accounting period. Key figures typically include opening inventory cost, total purchase cost during the period, total sales, and ending inventory at retail value.
Even if the beginning and ending stocktaking results are correct, abnormalities can arise when errors exist within purchasing or sales data. One common example is a cut-off error around the stocktaking date. For instance, products may physically arrive before the stocktake takes place, while the delivery documentation or system registration is processed after the stocktake date. In this case, purchase data may appear lower than the actual quantity received, which can cause the calculated gross profit margin to appear higher than it should be.
To reduce these risks, retailers should consider implementing clear operational controls around stocktaking periods. Deliveries, returns, and inventory movements may need to be restricted or carefully monitored before and after the stocktake. Products requiring daily replenishment may be exceptions, but clear procedures should be established and communicated to all relevant personnel. It is also important to ensure that inventory transfers between stores, warehouses, and departments are recorded accurately and promptly.
２．Pitfalls in Product Management and Inventory Loss
From an inventory management perspective, stock should be controlled not only by product category but also at the SKU level. Although shrinkage, or inventory loss caused by factors other than recorded sales or disposal, is often discussed in monetary terms, it fundamentally begins as a quantity issue.
On a quantity basis, inventory can be expressed as follows:
Beginning inventory quantity + Purchase quantity − Return quantity − Sales quantity − Lost quantity = Ending physical inventory quantity
Therefore:
Inventory loss quantity = Expected ending inventory quantity − Actual ending inventory quantity
As with financial reporting, cut-off errors can also create problems in inventory management and inventory loss analysis. Purchase quantity discrepancies may result from supplier shipping errors, receiving mistakes, or incorrect data entry. Return transactions may also create discrepancies if products are physically returned but not properly recorded in company systems.
Sales data can present another challenge at the SKU level. A product category and an SKU are not necessarily the same. For example, food products may have multiple flavour variants, while apparel and footwear products may be differentiated by size, colour, or style.
Although these variations may share the same selling price and purchase cost, SKU-level errors can significantly affect inventory management. A receiving or sales registration mistake involving one SKU may have little impact on the total inventory value, but it can create shortages of specific items and excess inventory of others. Such issues can reduce customer satisfaction and negatively affect sales opportunities.
Retailers should also pay close attention to markdowns, markups, and disposal processing. If markdowns are not recorded correctly, the resulting discrepancies may be interpreted as unknown inventory loss. Conversely, markups may make inventory loss appear lower than it actually is, potentially creating an inventory overage, where actual inventory exceeds the quantity recorded in the system. Improper disposal processing can also contribute to inventory overage and reduce the reliability of inventory records.
These challenges are particularly relevant in supermarkets and other retail environments where prices frequently change due to promotional campaigns, seasonal events, Tet-related sales activities, and special offers. In such situations, relying solely on manual controls may be difficult, making system-based inventory controls and regular verification increasingly important.
Ultimately, many stocktaking problems occur long before the physical count begins. Even the most accurate physical inventory count cannot fully compensate for weaknesses in daily inventory management, transaction processing, and data quality. Ensuring accuracy throughout the entire inventory management process is essential for achieving meaningful stocktaking results.
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👉 Stocktaking service – AJIS Vietnam
Read previous article: Column 1 Why Is Stocktaking Necessary for Retailers ?
Read previous article: Column 2 How Stocktaking Improves Inventory Accuracy
Editor: AJIS Group
AJIS Group is a global corporate group led by AJIS Co., Ltd., which has been a leading provider of stocktaking services and retail support services in Japan. The Group operates in the United States, China, Hong Kong, Taiwan, South Korea, Singapore, Malaysia, Thailand, Vietnam, and the Philippines.
With a proven track record of working with more than 3,000 companies and supporting a cumulative total of over one million stores annually, AJIS Group helps address a wide range of challenges faced by the retail and distribution industries. Its services include stocktaking, store operations support, sales floor improvement, and promotional support.
By providing practical services tailored to the market characteristics of each country and region, AJIS Group contributes to improving store operational efficiency and enhancing the value of sales floors.
