If you produce, maintain or sell a physical product, chances are that you’ll have stock on hand that’s essential to your business. Whether you’re managing raw materials, parts, finished products or all the above, stock control procedures are necessary to keep your business well stocked and running smoothly.
Here are just five of the many ways that effective stock control methods could provide better visibility and improve your business.
1. Negotiate with your suppliers better
Increased understanding of your stock usage and current stock levels means a better negotiating position with your suppliers. With a stronger grip on your inventory, you can calculate what resources it is worth buying in bulk and how regularly you will likely need to buy. Armed with this information, you can better negotiate bulk purchase discounts to reduce the cost of production and order less often, saving you time and money.
2. Provide a better customer experience
Effective stock management can help create great customer interactions in two ways. Understanding your stock needs will help you become familiar with cyclical changes and popular items. You can order according, and will be more likely to have in stock the regularly ordered items that your customers love. Being able to quickly meet your customers needs is certain to leave a good impression.
Knowing with certainty what is in stock and understanding your lead times on key items will help you to set realistic expectations for your customers around when they can expect their purchase to be fulfilled. It takes out the opportunity for over-optimistic guesstimation and means you’re on the same page from step one.
3. Minimise opportunities for downtime
Labour is one of the biggest running costs for a business. Having staff clocked in with no work to do can be a nightmare for any business owner, but effective stock control can help to prevent this but limiting stock outages.
Planning is at the heart of effective stock control. If you understand how your business typically uses stock then you can plan what you’ll need in the near future. This can mean studying the historic trends of your stock levels to predict what will be needed, but it can also be achieved by reviewing in real-time the stock you have on hand.
Whatever methods you adopt, planning and keeping your team well-stocked with the resources they need means they can focus on producing great work in a timely manner.
4. Identify and help prevent loss through theft and misuse
Understanding what you have is just as important as understanding what you need. A clear and accurate record of your assets can help you to more easily identify discrepancies. You may be able to spot missing stock that you wouldn’t have even realised is gone without a stock control system in place.
Additionally, if you are tracking usage of your stock, you can spot intentional or accidental misuse of stock that could be costing your business. Is a junior member of your team using twice as much to do the same job as an experienced colleague? Are there projects that churn through resources that were never factored into the pricing? Tracking what is drawn from stock can help you identify any issues that may be present in your team’s processes.
5. Improve your reporting accuracy
Understanding your stock is key to accurately reporting. Keeping accurate and up-to-date SOH (Stock on hand) records allows you to have correct values in your accounting system. This allows your accountants to have correct figures to work and will help to ensure your business can provide factual reports to the ATO.
Improving your stock control ensures consistency in reporting, and because your records are kept up-to-date, it makes analysis and reporting much easier when it needs to occur. You can have peace of mind knowing that the information you are working with to make business decisions and for taxation purposes is as accurate as possible.
While you consider the best way for you to improve your businesses stock control methods, you may also want to think about how reducing your stock could benefit your business. Read more in our recent blog “5 ways to reduce the stock you need”