Stock control and inventory management are the backbone of any successful business. Together, they ensure the right products are available at the right time, reducing costs while satisfying customer demand. But what exactly do these terms mean?
- Stock control is the process of monitoring and maintaining the right levels of stock to meet business needs without overstocking or running out.
- Inventory management covers a broader strategy. It involves the oversight of stock movement, storage, and usage within the supply chain.
Whatever the size of the business, effective stock control and inventory management are a must. Retailers, wholesalers, manufacturers, and e-commerce businesses alike need to maintain an efficient flow of stock. An inventory stock control system significantly impacts your profitability, customer satisfaction, and operational efficiency.
We put together this guide to provide actionable insights and strategies for mastering these processes. This article will help you understand how to transform your stock and inventory management into a well-oiled machine that supports your business goals.
The Benefits of Effective Stock Control and Inventory Management
An effective inventory and stock control system are the backbone of a well-organised business. When it’s done correctly, it leads to numerous benefits that improve operations, reduce costs, and boost customer satisfaction. Here’s how:
1. It saves on costs
When stock is managed effectively, your business can avoid overstocking or understocking. Both of these instances cost your business money. Overstocking ties up cash in unsold inventory and increases storage costs, while understocking can lead to missed sales opportunities and dissatisfied customers.
A well-maintained stock control system means you’re only ordering what you need when you need it. It’s a level of precision that helps reduce wasted resources and lowers operational expenses.
2. It improves customer satisfaction
Nothing frustrates customers more than delays or stockouts. So by keeping stock levels aligned with demand, your business can meet customer expectations promptly.
An inventory and stock control system provides real-time data to help you anticipate demand and avoid running out of popular items. This is important for ecommerce fulfilment, as it allows customer orders to be processed quickly and accurately. Happy customers are more likely to return, leading to repeat business and stronger brand loyalty.
3. It increases operational efficiency
When stock control is efficient, employees spend less time searching for products or handling inventory issues. It allows the order fulfilment centre staff to focus on value-added tasks instead.
Using tools like a stock management system lets your business automate repetitive tasks, such as reordering stock, tracking inventory levels, and updating records. Efficient inventory management also plays a key role in smooth order fulfilment, reducing delays, and improving overall customer satisfaction.
4. It helps with scalability
If you’re running a growing business, scaling up can be challenging without proper stock control measures. This is because an efficient inventory stock control system ensures that your operations can handle increased demand during growth phases or seasonal spikes.
For instance, during the holiday season, the demand for certain products surge. And with an optimised system in place, your business can quickly adapt to such changes without overwhelming your operations or staff.
Strategies that Will Help You Master Stock Control
We’ve established that mastering stock control is important for smooth business operations, and the right strategies can make all the difference. Below are time-proven methods that simplify stock management and enhance efficiency.
1. Implement Inventory Tracking Systems
Effective stock control starts with knowing exactly what inventory you have and its location. Barcoding systems, RFID technology, and cloud-based software are examples of advanced tracking tools that simplify this process by automating stock updates and providing real-time insights.
For instance, consider how a clothing retailer uses RFID tags on each garment. They can track inventory as items move from the warehouse to the store or as each item is purchased by customers. The process gets rid of manual data entry errors, plus ensures an accurate picture of stock levels at any given time.
Additionally, tracking systems can be integrated with point-of-sale (POS) software to update inventory immediately after a sale. Through this process, your business can identify fast-selling products and adjust restocking priorities accordingly. Tools like these are also helpful for reducing human error, preventing stock discrepancies, and ensuring you’re always informed about your inventory status.
2. Optimise Reordering Processes
Find the balance between ordering too frequently and stockpiling excess inventory. There is a mathematical formula called Economic Order Quantity (EOQ) that will help you determine the ideal order quantity of a product to lessen storage costs and how often you have to keep ordering products.
Keeping safety stock also comes in handy as it acts as a buffer to cover unexpected surges in demand or supplier delays.
Consider a toy retailer gearing up for the holiday season. By maintaining safety stock, the retailer can handle last-minute holiday rushes without disappointing customers or losing sales. This approach ensures continuity during critical periods like peak shopping seasons.
3. Perform Regular Audits
Even the most advanced systems require verification to accurately record data. Cycle counting, a method of auditing smaller sections of inventory at regular intervals, keeps your stock records reliable without requiring a complete shutdown for full inventory counts.
One good example of this is completing audits for high-turnover items weekly while checking lower-demand items less frequently. An approach like this helps detect discrepancies such as theft or mislabeling early on.
On that note, larger physical inventory checks can be scheduled quarterly or annually to validate the overall accuracy of the stock management system. Combining these methods ensures that your stock records align with reality. It reduces costly errors and enhances operational efficiency.
4. Categorise Inventory with ABC Analysis
To clearly illustrate this point, let’s take for example, that you’re running a business that focuses on selling electronics. Doing an ABC analysis will help you focus resources where they matter most. It works by segmenting inventory into three categories:
- A items: High-value products that contribute the most to revenue, like premium laptops in an electronics store.
- B items: Moderate-value items, such as mid-range tablets.
- C items: Low-value, high-volume items, like USB drives or laptop sleeves.
By prioritising “A” items for more frequent audits and better storage conditions, your electronic store can avoid stock outs for its most profitable product. And for “C” items, which have less impact on revenue, the focus shifts to efficient bulk handling and minimising storage costs.
Now how do you combine these strategies?
Let’s say, for instance, that you’re a book distributor. This is how these strategies would come in handy:
- Use RFID tags to track books to ensure stock availability as they move through the supply chain.
- Apply EOQ calculations to determine optimal reordering quantities for best-selling novels, so the store has a steady availability without overstocking.
- Conduct cycle counts for new releases weekly to account for higher turnover rates while auditing slower-moving titles less frequently.
- Use ABC analysis to prioritise stock management efforts on limited-edition books (Category A), standard editions (Category B), and bookmarks or other accessories (Category C).
Integrated strategies like these help a business reduce costs, improve customer satisfaction, and maintain operational efficiency.
Best Practices for Effective Inventory Management
There’s more to an inventory management system than tracking stock; it’s about aligning processes, technologies, and strategies to create a seamless operation.
1. Use technology to get real-time insights and to forecast demand
Modern tools like inventory management systems (IMS) and Enterprise Resource Planning (ERP) software are invaluable for tracking stock in real time. These tools let you monitor stock levels, sales trends, and supplier performance from one place.
Technology can also provide predictive analytics, so that your business can forecast demand, automate restocking, and eliminate risks of overordering or stockouts. Integration with supplier platforms also helps further streamline reordering.
Demand forecasting is also something technology can help with. It involves analysing historical data, market trends, and external factors like economic shifts or cultural events to predict if demand will go up or down. You should also consider anomalies, such as unexpected spikes in sales during promotions or changes in customer preferences.
2. Optimise warehousing for efficiency
An organised warehouse is more than just storage – it’s about enabling faster, error-free operations. Here are some steps to implement:
- Logical arrangement: Place high-demand items near dispatch areas for quicker access.
- Slotting optimisation: Group complementary items together to simplify order picking.
- Labeling systems: Use barcodes or QR codes for easy stock identification and movement tracking.
Advanced warehouses and order fulfilment centres also utilise automation technologies, such as robotic picking systems or conveyor belts, to reduce human error and speed up order fulfilment process.
3. Adopt Just-In-Time (JIT) practices
The JIT approach focuses on maintaining minimal inventory by synchronising stock deliveries with production or sales cycles. Leveraging 3PL services can support businesses in implementing JIT strategies, ensuring efficient inventory management and seamless order fulfilment during periods of high demand.
But while JIT can save costs, it also requires robust supplier relationships and contingency planning. A delay in delivery could disrupt operations, so businesses should diversify their supplier base or maintain minimal buffer stock.
4. Implement FIFO (First-In, First-Out) inventory rotation
FIFO is a stock management system that ensures that older stock is sold or used before newer inventory. It’s a good way to prevent obsolescence or waste. This is especially important for businesses dealing with perishables, such as food, beverages, or cosmetics.
And for non-perishable items, FIFO minimises the risk of products becoming outdated and being left unsold.
5. Conduct regular inventory audits
Auditing ensures that actual stock levels match recorded data.
Several types of audits to consider include cycle counting which involves checking small portions of inventory regularly instead of auditing the entire stock at once. Physical inventory checks are also a great idea. It involves a comprehensive count conducted periodically.
Doing a regular audit helps identify discrepancies, reduce shrinkage, and maintain accurate records for better decision-making.
6. Embrace sustainability in inventory practices
Sustainability in inventory management not only aligns with environmental goals but also brings long-term cost savings and strengthens brand loyalty. Adopting eco-conscious practices can position your business as a forward-thinking leader while optimising operations.
Some key sustainable practices include:
- Using recyclable or reusable packaging. Making the switch to biodegradable, recyclable, or reusable materials for packaging reduces environmental impact and appeals to eco-conscious consumers. It’s also a practice that cuts down costs associated with disposable packaging waste over time.
- Minimising overstock to prevent paste. We’ve touched on methods on how to prevent overstock already, but it’s worth repeating that accurate demand forecasting and adopting lean inventory practices can help your business minimise unnecessary stock and reduce disposal costs.
- Partnering with eco-friendly suppliers or fulfilment centres. Prioritise working with logistics partners and suppliers that put sustainability first. These partnerships reinforce your business’s environmental values and supply chain efficiency.
Final Thoughts
Mastering stock control and inventory management is a cornerstone of running a successful business. The combination of effective strategies and modern tools can help you implement a more efficient stock control and inventory management system.
Evaluate your current systems, identify gaps, and implement changes that align with your business goals and backed by real-time data analysis. It’s a process that requires investment and effort, but the rewards of greater efficiency, scalability, and profitability are well worth it.
If you need help with your stock control and inventory management systems, reach out to Green Fulfilment and we’d be happy to assist you.