“Out of stock”, “stock shortage” and “sorry, we have none left” are phrases that genuinely frustrate customers. Stock management is a problem most companies face. It is essential to the supply chain and to keeping a business going, and it is not always easy to get right. So how do you optimise your stock management and turn it into a real asset for your business?
What does good stock management look like?
Managing stock well means you always have the right products, in the right quantity, at the right time. It is therefore central to how flexible a company can be.
What does stock management give you?
Stock management makes your day-to-day operations easier
Managing stock well lets you:
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cut down on mistakes
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waste less time in the process, and so avoid delays
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meet demand, because you know when to restock and how much to order
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move goods to customers efficiently
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and, as a result, keep those customers happier
It gives you full visibility at any moment
Stock management lets a company know exactly how many products it holds right now, and retroactively too. The history that good record-keeping gives you is a source of useful data about your business and your customers.
It gives you the tools to anticipate future needs
All that information is a goldmine for forecasting your next orders. Resources are anticipated and planned ahead, which lets you hold a safety stock and avoid running out.
What are the risks of poor management?
Every company should do everything it can to stop its stock causing trouble. That said, the problems differ from one company to the next, so you need to find the answer that fits your own stock management issue. Poor stock management has several damaging consequences for a business:
- orders become harder to manage
- you need more labour
- picking and delivery are delayed
- storage space is badly organised
- equipment is under-used
- goods deteriorate
On top of that, companies risk being overtaken by better-organised shops or warehouses. In the market, that can make them less competitive. The challenge every company faces is this: find a balance between the two extremes of stock management, overstocking and understocking. That middle ground is called safety stock.
Avoid overstocking
On one hand, holding too many products in stock costs you real money. And storing some products for too long can damage them, leaving them prone to obsolescence, deterioration and so on.
Avoid the risk of understocking
On the other hand, not holding enough goods brings its own consequences. To begin with, a stock level that is too low raises the chances of running out. In the end that can bring production to a halt.
💡 Also worth reading: How to reduce stock-outs
And you lose sales. Running out of stock can leave your customers dissatisfied and push them towards the competition. Every customer lost inevitably means lower revenue. Finally, a low stock level can seize up your entire production chain. In short, stock management matters on several fronts: from how your warehouse is organised to how smoothly every operation in the supply chain runs.
How do you manage stock well?
1. Find the stock management method that fits your needs
Stock management starts the moment you order your raw materials. There are several methods, all built on two main factors: the date of the order and the quantity to order. You can restock on a fixed or a variable date, and you can order a fixed or a variable quantity.
The top-up method
Best suited to expensive or perishable goods such as foodstuffs, this method bases restocking on quantity. The buyer checks how much stock is left and orders the quantity needed to bring it back up to the maximum level.
Calendar-based replenishment
This method lets you order on fixed dates and in fixed quantities. It is usually set up under a contract between the supplier and the company. The supplier then sets precise delivery days for the months and years ahead, which makes planning easier for both parties. This method is for you if you are a well-established business whose goods sell at a steady rate.
The reorder point method
Also known as the “just-in-time” method, it works on a variable order date but a fixed quantity. The stock manager works to a “critical stock” level. As soon as it is reached, you place a restocking order so that the quantity of product stays the same. Be careful to plan ahead, though: once that critical threshold is reached, you need enough stock left to meet customer demand until the new supply arrives. Setting the right critical threshold is therefore essential, and strategic.
Replenishment on order
This is the most flexible method, and at the same time the hardest to run. It means ordering variable quantities on variable dates. The approach suits particular cases, such as projects that run over a set period, or where a single order is enough and can be placed before the project starts. Construction is one example: a firm can use this method on a building project.
2. Adopt stock management software
Managing your stock through dedicated software has several advantages. Among other things, it lets you:
- manage stock better and avoid shortages or surpluses
- anticipate orders
- optimise costs
- control lead times precisely
- track your stock in real time
- set alerts for when you need to order
- and more
In short, investing in stock software gives you visibility, responsiveness and better service by avoiding stock-outs and, with them, dissatisfied customers.
3. Move stock efficiently between your outlets
Beyond the alerts stock management software gives you, you also need to get deliveries right to meet your restocking needs. Technology can help here too, and make delivery operations easier. By adopting a transport management system such as Shippr, you fully optimise how deliveries are managed. Through your Shippr dashboard you have access to a wide range of delivery services. Whether you need delivery rounds to supply your various outlets or product transfers between your shops, Shippr lets you run deliveries that match your needs. We work with professional drivers using every type of vehicle, from cargo bikes to 20m3 vans, and our algorithms match the vehicle to the volume of goods to be carried. Delivered the same day, your products are handled with the greatest care, every day of the week, in any time slot.
To take advantage of all these delivery services and optimise your stock management, talk to one of our business experts.
