Stock management (also called inventory management in the US) can often be complex, but it is an essential lifeblood in any business and is important in organisational efficiency and process flow. In this comprehensive guide, we explore various aspects of stock control and managing stock with an emphasis on identifying issues and streamlining processes.
Understanding stock management
Managing stock involves the basics, such as having a record of current stock quantity, stock location and ongoing usage patterns. Through a process known as stock level balancing the aim is to have the perfect level of stock on hand at the exact time it is required through replenishing with an economic order quantity. Every movement of stock in or out needs to be meticulously recorded to have an accurate picture of stock levels.
Stock management is not just about counting though. Stock control requires an in-depth understanding of the process flows of goods as they move around the organisation. This is everything from raw materials arriving in a warehouse to the delivery of finished goods to a customer. Having a firm grip on stock management will enable you to make better purchasing decisions, manage stock “just in time” and avoid unnecessary cash flow being tied up.
The importance of efficient stock control
Managing stock control efficiently is a way of ensuring calm rather than mayhem! As well as delivering peace of mind, it ensures customers’ orders are fulfilled and avoids unnecessary stock wastage. Watch your cash flow soar as you efficiently manage stock, reduce stock holdings and eliminate waste. Efficient stock control focuses on being agile and responsive.
Stock level awareness is also great for responding to sudden market changes in customer demands, this could be for seasonal or general popularity reasons. Efficient stock management will ultimately deliver increased profit and customer satisfaction, which is a great combination!
Strategies for streamlining stock processes
Streamlining stock processes is “in vogue” and very necessary to maintain a competitive edge in a challenging commercial landscape. Organisations that invest in technology systems to manage stock control are reaping rich rewards, we discuss these systems below.
Integrating technology in managing stock
Technology has for many decades been transforming the way that stock is managed. This technological transformation of stock management is gathering pace though. Here are some ideas for technology solutions that might help your organisation:
- AI-driven forecasting tools – AI is very contemporary and is being increasingly used to forecast stock demands based on historical data and other criteria. From the available data, the AI product stock forecast needs, factoring in seasonal and market trends
- Automated reordering systems – with these systems, orders of stock are automatically placed based on certain predefined thresholds. This ensures a consistency of supply, reduces human intervention and is invaluable in the management of high turnover of stock items. Visit the DTC Hub, where we offer automated reordering
- Automated tracking systems – using technologies such as RFID and barcodes, automated tracking systems provide instant stock updates and reduce human errors. Use these for enhanced stock management and saving time on stock audits
- Cloud-based stock management – internet-based cloud systems are particularly useful for remote and multi-location organisations. Working globally, cloud-based stock management allows access to stock data in real-time and keeps your “finger on the pulse”, wherever you happen to be
- Data analytics for stock insights – access to advanced stock data analytics helps make informed decisions on stock issues, enhances performance, and highlights potential areas to work on. Crucial in identifying stock trends use these systems to manage stock levels through increased data-driven decisions
- E-Commerce integration – this is an established, but necessary part of stock management. Integrating stock management with e-commerce platforms ensures seamless synchronisation between online sales and stock levels. This is important in avoiding oversales on the internet, which cannot be fulfilled from stock levels. This also helps in maintaining accurate stock levels and improving the overall customer experience, even for a retail business with an eCommerce presence
- Mobile stock management – mobile apps allow staff to update and access stock information from anywhere, improving the efficiency of stock handling. They offer flexibility and ease of access, leading to quicker response times in stock adjustments
- Supplier integration systems – do not underestimate this one. Integration with supplier systems (such as ours at DTC!) offers improved ordering processes and enhanced supply chain efficiency. Choose supplier integration systems for process efficiency, improved supply chain management coordination, JIT replenishment and potentially improved prices from your supplier
Adopting a lean approach to stock management
Having the appropriate amount of stock when using a lean approach to stock management helps you maximise productivity and minimise waste. Understanding customer demand and streamlining the supply chain to meet it with the least amount of excess is the main goal of this strategy. Reduced storage costs, less chance of obsolete stock, and improved cash flow are all benefits of lean stock management. It involves developing an agile and more responsive stock system that closely aligns with business goals and market demands. Businesses can make sure that they are better satisfying customer needs and reducing costs at the same time by putting into practice a lean stock strategy. Everyone is benefiting from this circumstance.
Overcoming common stock control challenges
Despite being essential to business operations, stock control can be rendered ineffective by several factors. Recognising these barriers and putting in place efficient processes to overcome them is essential to maintaining a seamless, efficient stock management system.
Identifying and addressing stock issues
Creating a simple and efficient stock control system starts with identifying common stock issues. The following action should be taken to put these concerns into practice and enhance stock management as a whole:
- Inaccurate stock records – inaccuracies can lead to ongoing issues of understocking and overstocking and can also distort financial records. Avoid inaccurate stock records through stock audits and adopting digital tracking tools
- Inefficient stock storage – disorganisation in storage leads to issues. Ensure that you have an efficient and organised storage system with clear labelling and appropriate storage devices, which aid stock retrieval, monitoring, and counting
- Lack of training – a lack of staff familiarity with stock control processes will lead to issues. Thorough staff training is essential to avoid stock issues due to staff errors
- Manual stock management – manual processes are all too time-consuming as well as being prone to human error. Automating these processes, wherever possible, with modern technology solutions will deliver process efficiency gains
- Obsolete stock – particularly applying to perishable goods the best way of managing obsolete stock (also called dead stock) is “Prevention is better than cure” It is much better to accurately forecast stock demand levels and avoid obsolescence in the first place. Holding onto stock once it is obsolete defeats the object as it ties up valuable storage space. Additionally, disposing of obsolete stock through write-offs or discounting is also expensive
- Poor demand forecasting – inaccuracies in demand forecasting will lead to overstocking or becoming out of stock (stock outs or understocking). Invest in predictive analytics tools, which will enhance your forecasting accuracy
- Supplier reliability issues – Unreliable suppliers are not only irritating, but they will also create stock issues. Always aim to build strong relationships with quality suppliers and work hard to create a reliable supply chain
- Theft and loss – this significantly impacts stock levels. Implementing security measures and regular stock checks can minimise these risks
Strategies to avoid overstocking and understocking
Overstocking and understocking are opposites of the same problem, an inability to correctly manage stock levels. Understocking leads to missed sales and customer dissatisfaction, whereas overstocking ties up cash and can lead to obsolescence and costly write-offs or discounting. The way to go is to implement a just-in-time (JIT) stock management system, which reduces overstocking and understocking to an absolute minimum.
By using historical sales data (ideally enhanced by data analytics), demand analysis helps in predicting future stock trends and prevents under/overstocking. When planning stock orders, it is important to factor in seasonality and market trends, which can often lead to stock-level issues.
Continuous improvement in stock control
There are major benefits in maintaining a strict stock control plan, but system processes do need to be subject to continuous improvement. Maintaining optimal stock levels requires ongoing evaluation and adjustment. Past process flows may be outdated and might not work as well in the future. To keep competitive and efficient, it is essential to have an attitude of continuous improvement for reviewing and updating your stock management procedures. Businesses need to maintain optimal stock levels and adjust to new trends to stay ahead of the curve.
Now, about streamlining stock processes. Think of it as decluttering your stock process, cutting out all the unnecessary steps that slow you down. Streamlining leads to a smoother, quicker, and way more efficient stock management system. The best part is it seriously cuts down on errors, meaning you are not left scratching your head over why the numbers do not add up. So, keep it lean, mean, and super streamlined for a stock control management system that is practically running itself.
Contact us
We hope you have enjoyed this article about streamlining processes relating to stock management and stock control. Managing stock has never been so important, so why not implement some of the recommendations and suggestions in this article?
Join the DTC Hub and enjoy some of the benefits mentioned above. Click the link to investigate our processes such as just-in-time parts supply, stock control methods, rapid just-in-time ordering, and much more!
Contact DTC using any of these contact methods:
- Call us at – 023 8025 1100
- Emails – send to sales@dtc-uk.com
- Contact page – click this link
