Proper stock control lies at the heart of effective inventory management and is crucial for maintaining a streamlined business model. By accurately managing stock levels, you can ensure that you meet customer demand without incurring unnecessary storage costs.
This balance is achieved through the diligent monitoring and optimisation of inventory, allowing businesses to have just enough stock on hand. Implementing a stock control system, whether manual or software-based, aids in tracking inventory and managing supply chains efficiently.
Techniques such as Economic Order Quantity (EOQ), Just-In-Time (JIT) and Vendor Managed Inventory (VMI) can significantly enhance your inventory control methods. These systems help you avoid overstocking or understocking, reducing waste and ensuring that perishable items do not expire before use.
Furthermore, modern technology like Radio Frequency Identification (RFID) and other inventory management software can automate and improve the precision of your stock control efforts. Maintaining an efficient system is vital for reducing stock holding costs and ensuring customer satisfaction by always having the right products available.
In this article
Understanding stock control
Stock control, also known as inventory control, is the practice of overseeing and managing inventory levels to ensure that a business can meet customer demands while minimising costs. This involves various methods and practices to maintain accurate and efficient stock levels.
The basics of stock levels
At the core of stock control are stock levels, which refer to the quantity of each inventory item a business holds. Maintaining the right stock levels is essential to balancing supply and demand.
Too much inventory can lead to high storage costs and potential wastage, especially for perishable stock. At the same time, too little stock can result in shortages and missed sales opportunities.
Businesses often use metrics like minimum stock level and EOQ to decide how much stock to keep on hand.
Importance of inventory accuracy
Accurate inventory records are vital for effective stock control. If your records are inaccurate, the risk of both overstocking and running out of essential items increases.
Using technology such as inventory management software and RFID can enhance accuracy. Meanwhile, manual stock control methods, such as stock books, can be prone to human error.
Adopting digital systems helps in tracking inventory in real-time and diminishes errors. This leads to better customer satisfaction, as orders are fulfilled promptly and correctly.
Methods for stock management
Different stock control methods can be employed to manage inventory effectively.
Some businesses employ manual systems, relying on physical counts and stock books. Others use advanced systems like VMI, which allows suppliers to manage stock levels.
Batch tracking and component’s manufacturing date tracking are also crucial, especially in industries where traceability is essential. Integration of batch tracking systems ensures that each stock item can be traced throughout its lifecycle, enhancing stock quality control.
Incorporating inventory management software provides a comprehensive view of stock levels across multiple warehouses. This helps in optimising logistics and ensuring that stock is stored efficiently and economically.
4 Stock control techniques
Effective inventory management can significantly boost efficiency and reduce costs. Each technique has unique advantages and applies to various operational scenarios to help meet customer demand and optimise stock levels.
1. Economic Order Quantity (EOQ)
The EOQ formula is a fundamental principle in inventory management. It helps determine the optimal order quantity that minimises the total costs of inventory, including ordering and holding costs.
EOQ is particularly useful in keeping storage costs low while ensuring you have enough stock on hand to meet demand. This method requires accurate demand forecasting and an understanding of inventory holding costs.
Implementing EOQ can streamline your stock control processes, making it more efficient and cost-effective. You avoid overstocking, reducing the risks associated with excess inventory.
2. Just In Time (JIT) strategy
The JIT strategy aims to reduce inventory holding costs by receiving goods only as they are needed in the production process. This technique can significantly decrease the amount of stock you hold, thus lowering storage costs and reducing the risks of dead stock.
JIT requires a highly efficient supply chain and reliable suppliers. With this method, your inventory control system must be precise to prevent any delays that could halt production.
Effective JIT implementation ensures that your stock levels are kept to a minimum while still meeting production and customer demands.
3. ABC analysis
ABC Analysis is a method of categorising inventory into three classes: A, B, and C. Class A items are the most important, typically representing around 20% of the items but 80% of the value. Class B items are of moderate importance, and Class C items are the least critical, representing the majority of items but a small portion of the value.
By focusing on Class A items, you can ensure tight control over the most valuable stock. This method helps in prioritising inventory management efforts, allowing you to allocate resources efficiently.
ABC Analysis is effective for identifying which items require regular tracking and which can be managed with less scrutiny.
4. Vendor-Managed Inventory (VMI)
VMI involves suppliers managing inventory levels on your behalf. This method ensures that stock is replenished in a timely manner, reducing the risk of stockouts.
VMI can help you maintain minimum stock levels while ensuring that you have enough stock to meet customer demand. It can also reduce administrative costs as the vendor takes on the responsibility of stock monitoring and reordering.
By incorporating VMI, you can improve the efficiency of your supply chain and focus on other core business activities.
Stock control systems and software
Stock control systems and software play a crucial role in modern inventory management. These tools help you maintain optimal stock levels, reduce waste, and meet customer demand efficiently.
Choosing the right inventory management system
Selecting suitable inventory management software is fundamental. Our software, ControlPort™, provides you with real-time reporting and insights, helps with omnichannel fulfilment and eliminates the risks of stockouts.
What’s more, our online portal ViewPort, can boost customer satisfaction through giving them complete control and visibility over their orders post-checkout. It can also be customised with your brand’s logo and colours.
The shift from manual systems to automation
Moving from manual stock control methods to automated systems is a significant transformation. Manual systems, such as using a stock book or spreadsheets, can be time-consuming and error-prone.
Automation improves accuracy and efficiency in managing inventory. Automated systems, like ControlPort™, offer real-time notifications for low stock levels and perishable stock, enabling better decision-making.
Functions such as batch tracking integration and RFID streamline the stock control process and ensure precise tracking of stock items and raw materials. Automation can handle complex tasks effortlessly, reduce human error, and provide detailed insights, resulting in optimal stock holding costs and reduced excess inventory.
Integration with supply chain management
Effective stock control systems should integrate with supply chain management to enhance operational efficiency. Integration ensures seamless communication between different stages of the supply chain, from procurement to customer delivery.
Software like ControlPort™ not only manage inventory but also incorporate stock tracking and vendor managed inventory features that improve coordination with suppliers.
This integration is vital for maintaining EOQ and controlling storage costs.
By integrating inventory management with supply chain functions, businesses can respond promptly to market changes, maintain minimum stock levels without compromising on availability, and ultimately boost customer satisfaction.
3 Challenges in stock control
Stock control presents several significant challenges that can impact efficiency and profitability. These include managing stockouts and overstocking, preventing theft and damage, and minimising human error within inventory systems.
1. Dealing with stockouts and overstocking
Managing stock levels to prevent stockouts and overstocking is crucial. Stockouts occur when there is insufficient inventory to meet customer demand, resulting in lost sales and dissatisfied customers.
Overstocking, on the other hand, ties up capital, increases storage costs and can lead to perishable stock expiring. Efficient stock control methods such as JIT and EOQ can help optimise stock levels.
JIT reduces inventory holding costs by ordering stock only when needed, while EOQ calculates the optimum order quantity that minimises total inventory costs. Real-time inventory tracking and forecasting tools also provide insights into trends, allowing you to adjust stock levels to match customer demand accurately.
2. Prevention of theft and damage
Theft and damage can lead to inventory shrinkage, which directly affects profitability. Implementing robust security measures is essential. This includes access control systems, surveillance cameras and regular audits. Such measures deter theft and help quickly identify and address issues when they occur.
Improving handling procedures through staff training and using appropriate packaging can reduce the likelihood of damage. Technologies like RFID tags offer precise tracking of stock items, enhancing both security and accuracy in inventory management.
At J&J, we have 24-hour warehouse security, a designated high-value cage and all our quantities are tracked in real time.
3. Minimising human error
Human error in stock control can lead to incorrect stock levels, mislabelled items and mistakes in ordering processes. To minimise these errors, automation is key.
Inventory management software can track stock levels and automate ordering processes, reducing reliance on manual data entry and calculations. Barcoding systems, such as SKU numbers, streamline the inventory management process by ensuring accurate data capture.
Regular staff training ensures that employees are familiar with the latest systems and best practices, further reducing the potential for mistakes.
2 Stock optimisation strategies
To keep your inventory in optimal condition, it’s important to implement specific strategies. These include efficient stock reordering and improving warehouse management.
- Efficient stock reordering
Efficient stock reordering is crucial for maintaining balanced stock levels. Using inventory management software can help you track stock levels in real-time and automatically generate purchase orders when stock falls below a certain threshold.
Implementing an EOQ model can minimise storage costs and reduce the risk of overstocking. Additionally, RFID technology can enhance stock tracking, providing accurate data on stock movement and reducing human error.
- Improving warehouse management
Efficient warehouse management is key to optimising inventory. Effective stock management practices such as batch tracking and quality control ensure that stock is correctly organised and easily accessible.
Using advanced technologies like RFID and inventory management systems can further enhance stock tracking and organisation. Regular audits and cycle counts can identify discrepancies early, reducing the likelihood of stockouts or overstocking.
Efficient warehouse layout and storage solutions can improve space utilisation and increase overall efficiency.
Control your stock with J&J
Now that you understand a bit more about how to properly do stock control, you’re on the right path to optimising your business’ operations and inventory management. Partnering with J&J is another fantastic way to streamline and scale up your business’s day-to-day functioning.
Whether that’s using our international network of fulfillment centres to grow your target market or utilising our order fulfilment services to meet customer demand, we can help your eCommerce business meet its goals. To learn more about what we can do for you, contact us today via our online form.
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