Stock control involves ordering, storing and tracking your business’ supplies and finished products. It is a crucial function for any successful business. Inventories typically involve a combination of raw materials, work in progress and finished goods, so having the right amount of each in the right place is essential for a company to run efficiently and effectively. Stock control helps a business to slim ordering costs, close more sales and deliver on every commitment to its customers. Let’s take a look at some of the basic aspects of stock control.
Managing Stock Levels
The core role of an inventory manager is to carefully control a business’ stock levels. This involves making sure the business has enough stock to operate without holding much more stock than it needs to. The most significant concern is of course running out of stock; a store without enough inventory to meet demand will miss sales, while a factory that runs out of a key material may need to shut down an entire production line. Unfortunately, holding large reserves of safety stock is a poor way to address this risk as the ordering costs and increased cost of storage add up quickly. Stock control therefore involves walking a fine line between too much and too little.
Understanding Product Performance
Any business owner knows that some products perform better than others, but it is often difficult to know exactly how certain products are selling (particularly if your business carries a large number of product lines). Taking control of your business’ inventory information allows you to identify products that are selling quickly as well as slower moving products that have a relatively high ordering cost. With access to this information, your business can make better production and procurement decisions.
Forecasting Seasonal Fluctuations
To keep inventory levels in check, stock controllers must accurately forecast customer demand and lead times in the supply chain weeks and months in advance. Although businesses cannot predict the future, inventory management teams can use past years’ sales and supplier performance information to predict seasonal swings and event-based crunch points.
Keeping Track of Stock
Having the right amount of inventory in stock is of limited use if it is in the wrong warehouse or cannot be located quickly. Stock controllers typically use inventory control software, barcodes and RFID tags to know where the business’ inventory is located at any particular point in time.
Managing Supplier Performance
Many businesses have trouble finding consistently reliable suppliers. How do you pick the most appropriate supplier for your business? When suppliers fail to meet their commitments, your business’ ability to deliver on its own promises suffers. Inventory control typically involves tracking orders and receipting inventory so you can identify under performing suppliers and events that typically lead to poor performance. It is also worth benchmarking suppliers from time to time as this way, you know you’re getting the best ordering cost and on time performance possible.
Owners of small and medium sized businesses are often pressed for time and stressed. Better stock control improves business performance, reduces the frequency of high impact inventory mistakes and provides staff with more information to make better decisions. Owners of SMEs can sleep better at night knowing that inventory risks are under control.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.