Any business that maintains and moves stock should place important significance on stock control. Prioritising stock control will yield improvements by way of increased warehouse and order fulfilment efficiency, visible stock value, accessible profit margins, improved customer service and a decrease in the likelihood of deadstock.
Our article will detail why stock control is important and why maintaining an efficient stock control protocol is crucial to the success and agility of your business and its scalability.
Today the biggest gains come from software that forecasts demand and reorders for you, which we cover below.
What is Stock Control?
A function of inventory management (see below), stock control is the process of maintenance of stock quantities at an appropriate level: enabling businesses to meet marketplace demands and fulfil orders promptly to avoid delays.
Shelf space costs money – particularly when inventory consists primarily of FMCGs (fast-moving consumer goods) – therefore, businesses whose income relies on the sales of physical goods need to sell quickly. Effective stock control is utilised to ensure businesses always have enough stock to sell – increasing customer satisfaction – whilst also curtailing overspending on overstock and storage.
Efficiency in the stock control process can keep costs down, whilst increasing the profitability of the company.
What is Inventory Management?
The collective terminology for the journey of a sale of goods, inventory management is a catch-all term referring to the process of ordering, storing, using and selling inventory: including raw materials and components, as well as finished products and the storage and processing of said items.
Inventory management, as the entire process, is looked at and revised to streamline the management of inventories and order fulfilment.
Methods of Stock Control
Inventory planning is a critical aspect of supply chain management, encompassing various strategies aimed at maintaining optimal stock levels to meet customer demand while minimising excess inventory costs. Effective inventory planning techniques involve a comprehensive analysis of historical sales data, market trends, and demand forecasts. By leveraging advanced forecasting models and analytics tools, businesses can accurately predict future demand patterns and adjust their inventory levels accordingly.
There are several methods to stock control that you may wish to consider incorporating into your business, including:
- Batch Control
- Economic Order Quantity (EOQ)
- First In, First Out (FIFO)
- Just In Time (JiT)
- Vendor-Managed Inventory
Batch Control
The separation of stock is based on production batches: typically separated by manufacture date, processing facility, or both.
Economic Order Quantity (EOQ)
Optimising inventory management is essential for business efficiency and cost-effectiveness. Economic Order Quantity (EOQ) offers a strategic solution by balancing holding and ordering costs to determine the ideal inventory quantity. Despite its complex calculations, EOQ ensures businesses maintain optimal inventory levels, minimising costs and avoiding stock-related inefficiencies. In essence, EOQ empowers businesses to make informed decisions, driving down costs and maximising profitability in the long run.
First In, First Out (FIFO)
Very popular in industries with perishable goods – restaurants, supermarkets and cafes – this method seeks to move stock based on when it was brought in and use it before the next shipment arrives.
Just in Time (JiT)
Requiring exceptional organisation, this method orders stock as and when it is needed. Most likely to rile customers if stock is unavailable and suppliers are unreliable, the risk-reward ratio ensures ease of cash flow – as capital is not tied up in the inventory – but the likelihood of error may be higher.
Vendor-Managed Inventory
Vendor Managed Inventory (VMI) revolutionises stock control by fostering collaboration between retailers/buyers and suppliers. Through VMI, suppliers take charge of monitoring and maintaining optimal stock levels for buyers, facilitated by real-time data exchange often through automated software systems. This proactive approach ensures timely replenishment based on consumption patterns and forecasts, reducing lead times and stockouts for buyers.
VMI not only enhances stock control efficiency but also allows buyers to focus on core activities while benefiting from optimised inventory levels and reduced administrative burden. Furthermore, it promotes collaboration and transparency between buyers and suppliers, improving forecasting accuracy, reducing excess inventory, and enhancing overall supply chain performance. In essence, VMI signifies a proactive shift in inventory management, leveraging supplier expertise and real-time data exchange to achieve efficiency, cost reduction, and heightened customer satisfaction.
Real-Time stock tracking
Real-time stock tracking systems offer businesses unprecedented visibility into their inventory levels, locations, and movements, providing a host of advantages in stock control. By continuously monitoring inventory in real-time, companies can accurately track stock levels across multiple locations, reducing the risk of stockouts or overstock situations. This enhanced visibility enables businesses to optimise their inventory levels, minimise carrying costs, and improve overall operational efficiency.
Moreover, real-time data empowers businesses to make quicker and more informed decisions by providing up-to-the-minute insights into inventory status and trends. With access to real-time information on sales, returns, and customer demand, companies can dynamically adjust their inventory replenishment strategies, allocate resources more effectively, and respond rapidly to changing market conditions. Additionally, real-time stock tracking facilitates better inventory forecasting and planning, enabling businesses to anticipate demand fluctuations, identify potential supply chain disruptions, and proactively mitigate risks. Ultimately, by harnessing the power of real-time data, businesses can streamline their stock control processes, enhance customer satisfaction, and gain a competitive edge in today’s fast-paced marketplace.
The Benefits of Efficient Stock Control
Carefully and efficiently committing to tried-and-true stock control methods will have several benefits for your business.
Customer Satisfaction and Experience
Stock control directly impacts customer experience by ensuring that popular products are consistently available to meet customer demands. When stock levels are well-maintained, customers perceive your business as reliable, associating your brand with readily available items at their convenience. Efficient order fulfilment not only increases the likelihood of returning customers but also enhances your brand’s reputation for reliability. However, this positive perception is contingent upon maintaining competitive prices and providing exceptional customer service. By prioritising stock availability and efficient order fulfilment, businesses can cultivate customer loyalty and satisfaction, fostering long-term relationships and sustainable growth.
sustainability
Inefficient stock control practices can have significant environmental consequences, leading to excess waste, unnecessary resource consumption, and increased carbon emissions. Sustainable stock management involves minimising waste through accurate inventory tracking, optimising storage space to reduce energy usage, and implementing eco-friendly packaging solutions. Adopting practices like just-in-time inventory management, reducing packaging materials, and implementing recycling and reuse programs can help businesses minimise their environmental footprint while improving operational efficiency and reducing costs. By prioritising sustainability in stock control, businesses can contribute to environmental conservation efforts while enhancing their reputation and competitiveness in the market.
Organised Warehouse
An unorganised business can not hope to grow sustainably without some luck. This is doubly so for a disorganised warehouse: a new problem for each separate product that is in disarray. Integrating efficient stock management and controls empowers workers and creates commercial agility.
warehouse space saving
Efficient stock control is integral to maximising warehouse space by minimising excess inventory and optimising storage solutions. Techniques such as slotting optimisation and vertical storage systems effectively utilise available space, while technologies like warehouse management systems (WMS) and automated storage and retrieval systems (AS/RS) enhance inventory visibility and streamline operations. By accurately tracking inventory levels and demand patterns, businesses can reduce the need for excessive safety stock, utilise vertical space efficiently, and improve overall storage capacity without expanding the warehouse footprint. This combination of strategic stock control techniques and advanced technologies enables businesses to optimise warehouse space utilisation, enhance operational efficiency, and meet customer demand effectively while reducing costs.
Productivity: Enhanced
The implementation of efficient stock management protocols and stock management software can eradicate old-school manual methods of stock management and also contribute to digital transformation.
Stock Level Adequacy
Know exactly when a popular product is running low on stock, ensuring that it is always ready to be replenished with real-time stock control methods.
Commercial Agility Via Multiple-Channel Selling
Increase company profitability and brand recognition by selling goods and services via multiple platforms – such as eBay, Amazon, Shopify etc – with such channels being integrated with your stock control software.
Why Implement Stock Control?
There are several issues that effective stock control can help resolve or eradicate. From a customerโs point of view, when the stock of an item runs out, not only will the customer be annoyed, but they will also seek an alternative with an industry competitor: damaging the reputation of your brand and reducing overall profitability.
Employing a modern stock control software platform will add swiftness to your stock levels and overall inventory efficiency via real-time statistics, algorithm-based forecasting and seasonal trends.
Customer Returns
A visible process of returns when incorporating an effective stock control system maintains a swiftness when customers return unwanted or damaged stock: allowing the warehouse to accurately send out replacements or reincorporate stock into inventory.
Overstock
Avoid a bloated inventory and the capital that becomes firmly tied to said inventory until it is sold – harshly limiting cash flow. Holding onto static stock also creates long-term costs associated with warehousing and shelf space: particularly relevant with perishable goods, seasonal stock or fast-moving technology.
Theft/Errant Stock
Unorganised stock can increase the likelihood of internal theft, as inventory is more difficult to locate and keep track of: misplaced or lost inventory also becomes more frequent in the absence of effective stock control measures.
minimise deadstock
Deadstock, or inventory that remains unsold for an extended period, poses a significant challenge for businesses, tying up valuable resources and warehouse space. Effective stock control is essential for managing and minimising dead stock by accurately tracking inventory levels, identifying slow-moving items, and implementing strategies to reduce excess inventory. Deadstock not only occupies valuable storage space but also incurs financial implications such as storage costs, obsolescence, and potential write-offs, impacting profitability and cash flow. By optimising stock control processes and adopting proactive inventory management techniques, businesses can mitigate the risk of dead stock accumulation, improve overall inventory turnover, and minimise financial losses associated with obsolete inventory.
Classic Problems Require Modern Solutions
Though having completely accurate stock accountability is nigh-on impossible, modern software-based stock control systems can help: reduce process times and the probability of human error whilst providing real-time stock levels, alerts and seasonal trending information.
What is a Modern Stock Control System?
In short, a modern stock control system is an automated, software-based stock control system that incorporates each function and process commonly associated with inventory management and maintenance: incorporating such functions as purchasing, tracking, shipping, stock replenishment and inventory turnover.
Key Features of Modern Stock Control Systems
Automation
Reordering information and supplier price lists can be automatically achieved.
Real-time reporting
Reporting of inventory, summaries, transactions, order history, and trends can be maintained in such software control systems.
Software and platform integration
Selling platforms and customer relations management (CRM) software can often be seamlessly integrated into these systems.
AI demand forecasting and automated reordering
The newest systems predict demand and replenish stock automatically.
How AI is changing stock control
Stock control software has moved on fast. The newest systems use AI to predict demand and reorder stock with little human input, which is why the predictive AI market in retail is forecast to grow from $4.4bn in 2024 to more than $20bn by 2034.ย
From fixed reorder points to demand sensing
Older stock control sets a reorder point and waits for stock to hit it. Demand sensing reads live sales, returns and seasonal signals, then adjusts the reorder level on its own, so you hold less safety stock without risking a stockout.
What automated replenishment does
Automated replenishment turns those forecasts into action. It can raise purchase orders weeks ahead, flag slow movers before they become dead stock, and cut manual planning time by around 75%. For most businesses the gain is simple: fewer stockouts, less cash tied up on the shelf, and staff freed from counting to selling.
financial implications of stock control
Effective stock control is crucial for managing inventory efficiently and minimising costs. Poor control can impact gross profit and cash flow negatively. Excessive inventory ties up capital, while stockouts lead to lost sales and customer dissatisfaction. Strategies for minimising stockouts include robust inventory management systems and data analytics for demand forecasting, enhancing customer trust and loyalty while improving financial performance.
Experts in Stock Control
ADP Distribution is an expert at merchandising, warehousing, visual merchandising and stock control management.
Benefiting from a dedicated account manager and stock control professional, ADP Distribution will deliver a collaboratively transformative approach to your stock control, inventory management and order fulfilment process: increasing the visibility of your goods whilst maintaining their availability, translating to an increase in both sales and profitability.
Our internal processes will ensure stock levels are updated in real-time and improve the logistical management of your warehouse through the dedicated consultant assigned to your business.
Should you require more in-depth advice on stock control or how ADP distribution can add efficiency to your warehousing, inventory management and order fulfilment process, please give ADP Distribution a call today – we would love to chat.
Frequently asked questions
Can AI do stock control?
Yes. Modern stock control software uses AI to forecast demand, set reorder points and raise purchase orders automatically. This is known as demand sensing and automated replenishment. It reduces manual planning, cuts stockouts and lowers the cash tied up in surplus stock, while a person stays in control of the settings and exceptions.
