When a salesperson sees an item in the system but a warehouse operator cannot find it, the usual conclusion is that the stock figure is wrong. Before changing the quantity, however, the business must establish which figure is being compared. Physical, recorded and available stock answer different operational questions.
A manual adjustment can make a difference disappear on screen while leaving an unposted return, an incorrect unit of measure or an expired reservation in the process. The same discrepancy then returns.
The stock figures a business needs
| Stock type | What it represents | Question answered |
|---|---|---|
| Physical | The quantity actually present in a specific location | How many units can be counted now? |
| Recorded | The quantity resulting from posted receipts and issues | How many units should be present according to the system? |
| Available | Usable recorded stock less active reservations and blocks | How many units can be promised to a new customer? |
| Expected | A confirmed future receipt | How many units are due, and when? |
Available stock = usable recorded stock − active reservations − blocked quantity. Expected receipts should not automatically be treated as available because a delivery can arrive late or be accepted only in part.
Example: 12 on the shelf, 15 recorded and 7 available
The system records 15 units. Five are reserved for confirmed orders and three returned units are blocked pending inspection. On this basis, seven units are available. The warehouse operator can physically find only 12.
The difference between 15 recorded and 12 physical units requires investigation. The available figure of seven may still be correct because it describes the promise to a new customer rather than everything visible on the shelf. Mixing these levels leads to the mistaken conclusion that the system has simply removed stock.
Where discrepancies usually begin
- The movement happened before the document. Goods were shipped or moved, but the transaction has not been posted.
- The document was posted before the movement. A receipt appears in stock although the acceptance process is incomplete.
- The item is in the wrong bin. Total warehouse stock may be correct while a location is wrong.
- A return has no clear quality state. It is physically present but not yet approved for sale.
- Units of measure were confused. A case was received as one piece instead of 12 units, or the reverse.
- A reservation was not released. An order was cancelled but its quantity remains unavailable.
- Negative stock is allowed. The system hides an incorrect transaction sequence and carries the problem forward.
How to find the cause instead of forcing the figure
| Check | What to compare | What it can reveal |
|---|---|---|
| Item and warehouse | One SKU, one unit and one location | Prevents warehouses or similar products from being mixed |
| Cut-off time | The physical count and report at the same moment | Excludes movements made during counting |
| Transaction chain | The last correct balance and every later movement | Finds the first operation after which the difference appeared |
| Stock states | Reservations, blocks, returns and picking | Explains the gap between recorded and available stock |
| Storage locations | Bin balances against the warehouse total | Finds misplaced inventory |
Begin with one item and a precise time. Find the latest stocktake or transaction at which physical and recorded quantities definitely agreed, then review later movements in sequence. This usually identifies the root cause faster than recounting the entire warehouse.
Use the same cut-off time
A reconciliation is unreliable if the same item is being received, transferred or shipped while it is counted. The whole warehouse need not stop: temporarily freeze movement for the selected SKU or bin, record the cut-off time and include only transactions up to that point.
Draft or pending documents should be visible separately. They explain a future change but must not silently affect posted stock.
When an adjustment is appropriate
Use an adjustment when the investigation confirms an actual shortage, surplus, damage or an old error that cannot reasonably be corrected in its source document. Record the reason, approver, time and count evidence.
If an unposted shipment, incorrect return or wrong transfer caused the difference, correct the source transaction instead. Otherwise the movement history remains false and later analysis repeats the error.
Controls that stop the problem returning
- Do not allow sales from negative available stock without explicit authorisation.
- Define exactly when a reservation is created and automatically released.
- Separate usable, damaged and uninspected goods.
- Record the storage location for every movement.
- Cycle-count high-risk items instead of waiting for an annual stocktake.
- Track recurring reason codes as well as the value of adjustments.
Conclusion
Physical stock is what is present. Recorded stock is what should be present according to posted operations. Available stock is what remains promiseable after reservations and blocks. A difference is not always an error, but every figure must have a traceable origin.
The next step is to define the reservation lifecycle so the same item cannot be sold twice and cancelled demand reliably returns to availability. Explore the Business Reactor catalogue module.
