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Why Most Sari-Sari Stores Lose ₱3,000/Month Without Knowing It
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OperationsFebruary 2025·5 min read
What Inventory Variance Reports Actually Tell You
The gap between expected and actual stock is data. It points to theft, miscounts, or supplier problems — if you know how to read it.
An inventory variance report compares what your system says you should have against what you actually count. The gap between those two numbers is not a system error — it's information. Learning to read it is one of the most valuable operational skills a retail or F&B owner can develop.
Positive vs. Negative Variance
Positive Variance
You have more stock than expected. Usually means a sale wasn't recorded, a delivery was entered twice, or a return wasn't matched to a prior sale.
Negative Variance
You have less stock than expected. Common causes: theft, pilferage, miscounting, breakage, or supplier short-delivery that wasn't caught at receiving.
Common Causes and What They Tell You
Theft (staff or external)
Signal: Consistent negative variance on specific high-value items. Patterns often emerge around shift boundaries.
Miscounting at receiving
Signal: Variance on items that were recently delivered. Cross-check receiving log against supplier invoice.
Breakage not recorded
Signal: Particularly common in F&B — broken bottles, spilled stock, damaged packaging. These need to be written off formally.
Supplier short-ship
Signal: You paid for 50 units but received 47. Without a receiving count at delivery, this disappears into variance.
Setting Acceptable Thresholds
Not every variance requires investigation. Set thresholds by SKU category: for fast-moving consumables (drinks, snacks), a ±2% variance may be acceptable given measurement imprecision. For high-value items (spirits, premium cuts of meat), any variance greater than 1 unit warrants a look. The goal isn't zero variance — it's knowing what your normal variance looks like so you recognize when it changes.
How Frequent Counts Help
Monthly full counts work, but they surface problems that have been building for 4 weeks. Weekly spot counts on your top 20 SKUs by value catch problems faster. Daily counts on your highest-theft-risk items (typically spirits, electronics accessories, or any fast-moving high-value item) let you respond before the loss compounds.
Nexus7's NexusStock generates variance reports automatically after each physical count entry, highlights items outside your acceptable thresholds, and tracks variance trends over time — so you can see if a problem is getting worse, not just that it exists.
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