Taking Stock: Exercise Good Stock Control
If your business is one that produces a physical product to sell on to customers, stock control will be at the forefront of everything you do. At any one time you will need to have a grasp of your stocks of supplies of raw materials needed for the production of your product, stocks of incomplete products still being made and of course the stocks of finished products ready to sell.
A vital balancing act takes place in order to minimise holding costs, whilst ensuring that stocks of sale-ready products do not run low and this balancing act involves everyone from the stock controllers and purchasers to the marketing department. Sales forecasts from the marketers help the purchasing department estimate what stocks of raw material to buy in, but everything from seasonal variations to unexpected demand can send this sort of careful planning in to mild chaos.
Although most companies will keep extra stock in to prevent running short, not all industries allow for this possibility and the stock control dance becomes even more delicate. Those manufacturers who produce perishables for instance cannot necessarily sit on large quantise of either ingredients or finished product, as the life of their product may be limited.
Getting your stock control system wrong can result in expensive overstocking, or ‘stock-outs’ where you cannot meet customer demand. Overstocking will mean having to find money to pay for warehouse space to store stock as well as insure and secure it all of which could result in cash flow issues. Allowing raw materials to run out could result in having an idle workforce or loosing customers who may reach out to a rival supplier for help and give their business to your competitors.
If you are a small business the issues of stock control become even more significant and yet even more difficult; cash flow is of course important to all firms, but to a small business a cash flow crisis could mean its demise. The small business relies on its customer base for survival and having to close its doors for any length of time could result in a loss of hard won customers that again could majorly damage trading.
In these days of technological wonder it is probably wise, regardless of your size, to utilise a computerised stock control system that can keep track of every stock stream at once and product almost instant reports for the various departments that need them; these systems can also help the small business owner to run complex stock control without the help of others.
There is no one single method of stock control, rather, there are many, with a few standing out because of their common use and general success, and it is choosing the right method for your business that is the key to making stock control work for you.
Whether you opt to use a popular system of stock control or one you have devised yourself it is important to make a decision early in the life of your business and stick to it, most disasters can be prevented by being consistent and following through with your plans.
