Stock control is a key element of running a successful business.
Effective stock management is in striking a good balance between having enough stock to fulfil demand, but not too much to the point where storage is running out and money is being tied up.
Maintain correct stock levels
Businesses fear running out of items and inconveniencing customers or losing business entirely, but being overstocked is a drain on physical and monetary resources. Fortunately, accurate forecasting of sales and tracking stock as orders are processed is easily possible with modern tech such as barcode scanning inventory systems.
The 80/20 rule applies in many cases; 80% of sales come from 20% of the stock.
Focusing on the faster moving items can be achieved using data gathered by POS (Point of Sale) systems to create a historical sales model that can be used to help gauge how much of a given item to stock to meet demand, but not cause overstocking.
It’s also important for businesses not to be seduced by suppliers’ special offers unless they tie in with their stocking plans. Buying more stock because of a tempting deal such as heavy discounts or free shipping could ultimately waste money and take up space.
FIFO – First In, First Out
Keeping stock fresh – even non-perishable items – is important so stock should be replaced from back to front to ensure older items are sold first.
No matter how careful and diligent a business is with stock control systems and procedures, discrepancies can creep in after a time so physical counting will be necessary.
The best way is to set up a routine for counting certain sections of stock on a rotational basis, sometimes referred to as inventory cycling, as opposed to conducting a physical stocktake all in one go and maybe having to suspend operations for a time.
Once stock has been counted it’s important to calculate the ‘variance’ – the actual number counted versus what the system says is in stock.
The goal should be to reduce this variance number down in future physical counts as an indicator that stock control overall is improving.
Manage write-offs, ‘freebies’ and returns
If written off stock – damaged or not fit for resale when returned – is a relatively small trickle, it’s all too easy to let it slip through the net when tracking it for stock purposes. The same applies for items being given away such as for charities or as prizes in a competition for example.
These should be treated as ‘sold’ items even if no revenue is being generated – a zero value sale record should be created to keep track of product leaving stock under this category.
It’s important not to be lax here as over a period of time even a handful of products being returned or written off can compound in numbers to the point where it throws stock inventory records out.
A failsafe system for recording if an item is being returned to stock (if applicable) should be put in place.
Backups and a reliable stock control system
Perhaps it’s stating the obvious, but it’s vital for businesses to ensure they have a reliable stock control system that meets their demands and can be easily backed up. Regular, easy to access backups should be taken of stock control data to protect against the worst happening.
With relatively cheap cloud storage there’s no reason not to have several backups.