This article describes the process of understanding where there are differences between the Theoretical Inventory (system – calculated stock on hand), and Actual Inventory figures (manual Inventory count) using the Variance Analysis tab in Fourth Analytics for Purchasing & Inventory (formerly known as Adaco).
This tab shows all stock movements recorded in and out of an area to produce a theoretical stock figure, which is then compared to an actual Inventory count, and the difference quantified in value and percentage terms.
Top Banner Figures
This graphic displays:
- Top Line - The key values of opening stock and stock movements recorded to produce a system generated stock value (on hand), Inventory count value (closing), and any variance
- Bottom Line – Information of what the stock movements comprise of by transaction type
Fig.1 – Top Banner Figures
Inventory Closing (count) Vs System on Hand
This graphic shows a trend pre-set for the previous 10 Stock Periods, with each bar representing a Stock Period.
- The entire column height equates to the system-on-hand stock value
- The beige column represents the value of counted stock
- The orange block displays the difference (variance) between counted and calculated value
- The grey trend line shows the difference as a percentage of calculated stock value, period-on-period
Fig.2 – Inventory Closing (count) Vs System on Hand
Top 10 Variance Outlet - Value
This report displays the 10 Outlets (by stock location) with the largest variance in value terms between calculated stock on hand and Inventory count.
Fig.3 – Top 10 Variance Outlet - Value
Top / Bottom 10 Variance by Quantity
These tables list the 10 Products (in volume order) with the largest positive (left) and negative (right) variances by Inventory unit quantity.
Fig.4 – Top/Bottom 10 Variance by Quantity
Top 10 Variance by Subcategory / Property
These graphs list the 10 Subcategories / Properties (in volume order) with the largest positive variances.
Fig.5 – Top 10 Variance Items – Subcategory/Property
Outlet Variance Report by Outlet Value
This table displays a breakdown by Outlet of the key values of opening stock and stock movements by transaction type to produce a system generated stock value (on Hand), Inventory count value (closing), and any variance.
- To break this information down further, use the All Categories and All Subcategories buttons
Fig.6 – Outlet Variance Report by Outlet - Value
Outlet Variance Report by Product Value / QTY
These two tables display a breakdown of Product either by monetary value, or product quantity. The default is that only Products with variances between calculated and counted stock-on-hand are displayed, but Products with no variance may be included by selecting Including Items with No Variance button.
Fig.7 – Outlet Variance Report by Product – Value/QTY
This example scenario outlines the process of understanding where the largest stock variances are between actual counted stock, and system calculated stock on hand using the graphs and tables displayed above.
- Select the required time period using the Date Dimension (Business day) filter under Property Details
- Within the Property Details filters, set the Property or Outlet filter(s) as required
- Review the Top Banner Figures to see the total variance, and the Inventory Closing (Count) Vs System on Hand graph to understand if this variance has been increasing or decreasing
- Refer to the Bottom 10 Variance by Quantity table to identify which Products may be driving the variance (also refer to the Top 10 Variance by Quantity to check that this is not caused by one product being substituted for another)
- Refer to the Top 10 Variance by Subcategory / Property to identify the key areas and apply appropriate filters if required
- Then, use the detailed reports to identify which particular Products are driving the differences, and refer to the transaction type totals to help identify if this due to transactions not being recorded