Stocktake Discrepancy to Inventory Adjustment: A Store SOP Template
Stocktake Discrepancy to Inventory Adjustment: A Store SOP Template
You finished your stocktake. The scans are in, the counts are submitted, and now you are staring at a variance report full of mismatches. Fourteen units expected, nine counted. Twenty-three expected, twenty-seven counted. The numbers do not match, and someone needs to decide what to do about each one.
This is the moment where most retail teams stumble. Without a clear, documented process, discrepancies get handled inconsistently — one manager investigates everything, another auto-adjusts the lot, a third ignores it until next quarter. That inconsistency compounds over time and erodes the very inventory accuracy your stocktake was supposed to improve.
What you need is a Standard Operating Procedure. Below is a ready-to-use SOP template for handling stocktake discrepancies in a Shopify POS environment.
Why You Need a Formal Discrepancy SOP
A stocktake without a follow-up SOP is like a medical test without a treatment plan. You identified the problem; now what?
A formal SOP ensures:
- Consistency: Every discrepancy is handled the same way, regardless of which staff member or manager is on duty.
- Speed: Staff do not waste time deciding what to do. The process is defined. They follow it.
- Accountability: Every step has an owner. Every decision is documented. If a pattern emerges later, you can trace it back.
- Compliance: For businesses that need inventory records for tax, insurance, or audit purposes, a documented SOP demonstrates due diligence.
- Continuous improvement: When you track discrepancies systematically, you can identify root causes and fix them. Without the SOP, discrepancies are just noise.
Common Causes of Inventory Discrepancies
Before diving into the procedure, it helps to understand why discrepancies occur. Knowing the common causes lets your team investigate faster.
Shrinkage (Theft and Loss)
External shoplifting and internal theft are the most feared causes, but they are often over-blamed. Before assuming theft, rule out the operational causes below. That said, consistent unexplained losses in high-theft-risk categories (small electronics, cosmetics, accessories) should be flagged for loss prevention review.
Receiving Errors
A shipment arrives, gets placed on the shelf, but the receiving step in Shopify is skipped or done incorrectly. Maybe the quantities received do not match what was entered. Maybe a box was partially received and the remainder was forgotten. Receiving errors are one of the most common causes of positive discrepancies (counted more than expected).
POS Transaction Errors
A cashier scans the wrong barcode. A return is processed against the wrong SKU. A “no sale” transaction is used to void a sale but the inventory is not restored. These small errors accumulate and show up as discrepancies during counts.
Transfer Errors
For multi-location stores, stock transfers are a major source of discrepancies. Items are physically moved but the transfer is not created in Shopify, or items are transferred in the system but not physically moved. See the multi-store stocktake guide for how to handle this across locations.
Damage and Spoilage
Products get damaged on the floor, in the stockroom, or during handling. If the damage is not recorded as an inventory adjustment at the time it happens, it shows up as a discrepancy during the count.
Counting Errors
Sometimes the discrepancy is not in your inventory — it is in your count. Missed shelves, double-scanned items, wrong barcodes, or simple miscounts all create false discrepancies.
The SOP Template
Scope
This SOP applies to all inventory discrepancies identified during full stocktakes, cycle counts, and ad-hoc inventory checks at [Your Store Name]. It covers the process from discrepancy identification through investigation, adjustment, documentation, and reporting.
Roles
| Role | Responsibility |
|---|---|
| Counter | Identifies and reports discrepancies during count |
| Reviewer | Investigates discrepancies, approves minor adjustments |
| Manager | Approves major adjustments, reviews trends, escalates to HQ |
Step 1: Identify
After the count is submitted, generate a variance report comparing counted quantities to system quantities. Flag every SKU where the counted quantity differs from the expected quantity.
Classify each discrepancy by severity:
| Severity | Criteria | Example |
|---|---|---|
| Low | Variance of 1-2 units AND under $50 total value | Off by 1 on a $15 t-shirt |
| Medium | Variance of 3-5 units OR $50-$200 total value | Off by 4 on a $30 candle |
| High | Variance of 6+ units OR over $200 total value | Off by 3 on a $90 jacket |
Adjust these thresholds based on your average product value and acceptable loss tolerance. A jewelry store will have much tighter thresholds than a dollar store.
Step 2: Investigate
Low severity: No investigation required. Proceed to Step 3.
Medium severity: The Reviewer investigates before adjustment. Check:
- Was the zone fully counted? Look for missed shelves or stockroom areas.
- Check Shopify’s inventory history for the SKU. Were there recent sales, returns, or transfers that might explain the gap?
- Is there a known issue with the barcode for this product (duplicate barcodes, missing barcodes)?
- Ask the counter if they recall anything unusual about this product or zone.
High severity: The Manager investigates. In addition to the medium-severity checks:
- Request a recount by a different staff member.
- Review security footage if available and theft is suspected.
- Check receiving records for the product over the past 30 days.
- Check transfer records if the product moves between locations.
- Document findings in the investigation log.
If investigation reveals the root cause, record it. If the cause is operational (receiving error, POS error, transfer issue), flag it for process improvement. If the cause is suspected theft, follow your loss prevention procedures.
Step 3: Adjust
Once a discrepancy has been classified and (if required) investigated, make the inventory adjustment in Shopify.
In Shopify Admin:
- Go to Products > Inventory.
- Search for the SKU.
- Click on the product and select the relevant location.
- Click Adjust (not “Set”) to create an adjustment record.
- Enter the quantity change (positive or negative).
- Select the appropriate reason from the dropdown, or enter a custom reason.
Use consistent reason codes:
| Reason Code | When to Use |
|---|---|
Stocktake correction | Standard count-based adjustment, cause unknown or minor |
Damaged | Item found damaged during count |
Shrinkage - suspected theft | Unexplained loss after investigation |
Receiving error correction | Discrepancy traced to a receiving mistake |
Transfer error correction | Discrepancy traced to a transfer mistake |
Found - not in system | Physical item found with no matching system record |
Approval requirements:
- Low severity: Reviewer can approve.
- Medium severity: Reviewer can approve after investigation.
- High severity: Manager approval required.
Step 4: Document
Every discrepancy and its resolution must be documented. At minimum, record:
- Date of the stocktake
- SKU and product name
- Location
- Expected quantity (system)
- Counted quantity (actual)
- Variance (counted minus expected)
- Severity classification
- Investigation notes (if applicable)
- Root cause (if identified)
- Adjustment made (yes/no, and the amount)
- Approved by (name and role)
A shared spreadsheet works for this. The format matters less than the discipline of filling it out every time. Over time, this log becomes your most valuable tool for identifying systemic issues.
Step 5: Report
After every stocktake, the Manager generates a summary report covering:
- Total SKUs counted
- Total discrepancies (number and percentage of SKUs counted)
- Total variance by value (net and absolute)
- Discrepancies by severity (low / medium / high counts)
- Top 10 discrepancies by value
- Identified root causes (breakdown by category)
- Comparison to previous stocktake (improving or deteriorating?)
This report should be reviewed by whoever is responsible for inventory performance — whether that is the store manager, operations manager, or owner. Look for patterns:
- Are the same SKUs always off? You may have a labeling or shelving problem.
- Is shrinkage concentrated in one product category? You may need to adjust your merchandising or security.
- Are discrepancies growing over time? Your operational processes may be degrading.
- Did a specific corrective action from last month’s report actually reduce discrepancies? Measure it.
These trends feed directly into your retail inventory metrics and should inform your operational decisions.
Making This SOP Stick
A written SOP is only useful if your team follows it. Here is how to make it stick:
1. Train every staff member involved in counts. Walk through the SOP with them, not just hand them a document. Role-play a few scenarios: “You counted 8 but the system says 12. What do you do?”
2. Keep it accessible. Print a one-page summary and post it in the stockroom. Put the full document in whatever system your team uses (Google Drive, Notion, a shared folder).
3. Enforce it consistently. If a manager skips the investigation step for a high-severity discrepancy, that undermines the entire SOP. Hold everyone to the same standard.
4. Review and update it quarterly. Your thresholds, reason codes, and investigation steps should evolve as you learn from your data. The first version of this SOP will not be perfect. That is fine. Update it.
5. Celebrate accuracy improvements. When your discrepancy rate drops from 8% to 4%, tell your team. They did that. Recognizing progress builds buy-in for the process.
What Comes Next
This SOP covers what happens after you find a discrepancy. But the goal is to have fewer discrepancies to begin with. That means tightening your upstream processes: better receiving workflows, more consistent POS procedures, regular cycle counts, and proper staff training.
Start with the complete barcode stocktake guide to build the counting foundation, then layer this SOP on top for discrepancy handling. Track your results with the five essential inventory metrics, and within a few cycles, you will see real, measurable improvement in your inventory accuracy.