What Are The Best Practices For Stock Control?
For every business owner, the term ‘stock control’ invokes the fundamental aspect of managing inventory—which, in turn, can make or break a business’s financial health.
by a.huynh | In: Inventory |
From the mom-and-pop shop on the corner to the Fortune 500 company, efficient stock control practices are crucial for maintaining the delicate balance of supply and demand. In this comprehensive guide, we’ll break down the best practices in stock control, the role of technology, and strategies to tackle common challenges businesses face in this pivotal area.
The Essence of Stock Control
Stock control, also known as inventory control, is how a business oversees and regulates the amount of product it has available for sale. The overarching goal is simple—maximise sales and minimise losses. Yet, in practice, this is a multifaceted challenge that requires strategic planning and consistent execution.
Imagine a supermarket that consistently understocks its shelves. It’s a frustrating experience for customers who can’t find what they need, but more importantly, it’s a missed opportunity for the business to satisfy demand and generate revenue. On the flip side, overstocking can lead to waste, increased holding costs, and a strain on cash flow.
Efficient stock control involves tracking inventory and understanding and predicting consumer behaviour. It consists in optimising your supply chain and ensuring that you always have the right amount of stock in the right place at the right time.
Best Practices for Stellar Stock Control
Conduct Regular Stock Audits
The foundation of reasonable stock control is a thorough understanding of what you have in your inventory. Regular stock audits are essential for maintaining this knowledge. Audits can be scheduled—such as monthly or quarterly checks—or can be ongoing with the help of digital inventory systems.
During these audits, you reconcile physical stock with recorded stock levels, identify discrepancies, and investigate the reasons behind them. This process uncovers common issues like stock shrinkage or human error and keeps your data reliable, which is crucial for making informed business decisions.
Forecast Demand and Replenish Stock Efficiently
Accurate forecasting is a game-changer in stock control. You can predict when and how much stock you’ll need by analysing sales data and market trends. This proactive approach helps businesses avoid stockouts, reduce lead times, and even lead to cost savings by allowing you to take advantage of volume discounts and more favourable terms from suppliers.
Implement an Efficient Ordering System
An efficient ordering system is critical for maintaining optimal stock levels. The goal is to order just enough to meet demand without overstocking. Review your stock levels regularly and set up automated reorder points for products that sell consistently. This ensures you never run out of stock without tying up excess capital in holding too much inventory.
Adopt the ‘First In, First Out’ (FIFO) Method
FIFO is a principle in which the first items purchased are the first to be sold or used. This method is crucial for businesses with perishable or time-sensitive stock, such as food or cosmetics, for minimizing waste and keeping inventory fresh. Ensure your stock is arranged so older items are always placed in front for quicker sale and use.
Technology’s Role in Revolutionizing Stock Control
Inventory Management Software
Modern businesses are turning to inventory management software to revolutionise their stock control. These systems offer features ranging from simple inventory movement tracking to complex demand forecasting and cloud-based accessibility, which is particularly useful for businesses with multiple locations or an online presence.
Inventory management software saves time, provides real-time data, automates reorder processes, and streamlines the entire stock management operation.
Barcode and RFID Technology
Barcoding and Radio-frequency identification (RFID) are technologies that enable instant tracking and counting of inventory. By scanning items or using RFID readers, businesses can update inventory levels in their system, reducing the need for manual counting and ensuring data accuracy in real-time.
Barcoding is a more cost-effective solution, whereas RFID does not require line-of-sight to read, making it ideal for high-volume, high-velocity stock.
Just-in-Time (JIT) Inventory Systems
JIT systems are predicated on receiving goods only when they are needed in the production process. While initially designed for manufacturing, JIT principles can be applied to stock control to minimise holding costs and the risk of obsolescence. Technology plays a significant role in JIT systems by enabling close communication with suppliers and allowing for precise delivery scheduling.
Overcoming Stock Control Challenges with Ingenuity
Running into challenges in stock control is not a case of ‘if’ but ‘when’. Here are several standard stumbling blocks and ways to leap over them.
Addressing Seasonality and Demand Volatility
Seasonal businesses face fluctuating demand, which can be hard to predict. The key here is historical data—track past sales patterns, consider external factors like weather, and be ready to adjust your forecasts and ordering strategies accordingly. Work closely with suppliers to ensure they can meet your increased demand during peak times.
Battling Stockouts and Overstocks
Stockouts lead to customer dissatisfaction and missed sales opportunities, while overstocks mean wasted inventory and capital. Set up clear indicators in your stock control system that alert you when stock levels reach certain thresholds, and be ready to make quick decisions to rectify any deficiencies.
Managing Multiple Sales Channels
Keeping track of stock levels can be complex if you sell through various platforms—brick-and-mortar stores, online marketplaces, or your e-commerce site. Centralise your management with an inventory system that syncs across all channels, and adopt barcoding or RFID for quicker, more accurate tracking.
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