Stock Control

Understanding Stock Control

  • Stock control, also known as inventory management, refers to the process of tracking and managing the stock of goods within a business.
  • This process involves organising, replenishing, and accounting for all goods coming into, within and leaving the business.

Reasons for Stock Control

  • Stock control is crucial to ensure that a business always has the right amount of stock on hand to meet customer demand while also minimising costs associated with storage.
  • Effective stock control prevents stock-outs (running out of certain products) and overstocking (having too many of a certain product), both of which can negatively impact a business’s profits and reputation.

Types of Stock

  • Businesses usually have three types of stock: raw materials (items purchased to produce goods), work-in-progress (goods in production) and finished goods (ready for sale).
  • The type of stock a business has will depend on the nature of the business. For instance, a retailer primarily has finished goods, while a manufacturing business has all types.

Stock Control Methods

  • Businesses can employ different methods of stock control such as First In, First Out (FIFO), Last In, First Out (LIFO), and Just In Time (JIT).
  • FIFO method assumes that the first goods to be stocked are the first to be sold. This method is used by businesses dealing with perishable goods.
  • LIFO method assumes that the last goods to be stocked are the first to be sold. This method is often used by businesses with non-perishable goods.
  • JIT method involves ordering and receiving stock just when it is needed in the production process. This helps to reduce costs associated with storing excess stock.

Technologies Used in Stock Control

  • Many businesses use stock control systems, like barcoding technology and Electronic Point of Sale (EPOS) systems, to efficiently manage inventory.
  • These systems provide real-time information about stock levels, making it easier for businesses to order stock in a timely manner and prevent overstocking.

The Impact of Stock Control on a Business

  • Effective stock control can improve a business’s reputation by ensuring that customer demand is met consistently.
  • It also helps businesses reduce costs associated with storing excess stock and losing sales due to stock-outs.

Challenges in Stock Control

  • Unexpected fluctuations in demand, issues with suppliers, and internal challenges like theft can impact the efficiency of stock control.
  • Businesses need to be proactive and dynamic in order to handle such challenges and optimise their stock control processes.