The practice of ordering, storing, managing, and regulating goods is known as stock management. Stock management encompasses all items used by a company to manufacture its goods or services, from raw materials to completed goods. In other words, stock management encompasses all aspects of a company's inventory.
Stock management is also known as inventory management or inventory control.
Inventory is a significant asset that symbolizes locked-up capital; efficiently managing stock allows a company to free up capital.
Understanding the mix of different types of stock and realizing the demands on that stock are required for effective stock control. This helps to maintain a suitable level of stock, balancing the requirement for surplus supply with the desire to reduce tied-up capital.
There are two techniques to stock management for small businesses: periodic and perpetual stock taking.
Periodic stock management: This inventory valuation system necessitates physical inventory records at regular periods. This strategy is ideal for small firms with limited inventory and is far less expensive than electronic tracking systems. However, because physical stock takes are time-consuming, it is not ideal for large enterprises with substantial inventories.
Perpetual stock management: This approach relies on electronic tracking and POS systems to continuously record and track inventories. While more expensive than physical inventory counts, this technology provides a more precise and up-to-date indication of stock levels and eliminates the danger of human error.
Before you can tackle good inventory management, you must first grasp what inventory consists of. The following are some examples of inventory:
- Raw materials are the materials used to make your products.
- Unfinished goods, works in progress that are not yet ready for sale
- Completed goods that are normally stored in a warehouse until they are sold or sent
- In-transit goods are those that have left the warehouse and are being transported to their eventual destination.
- Cycle inventory refers to things that are sent from a supplier or manufacturer to a business and then immediately sold to customers.
- Anticipation inventory, or extra merchandise purchased in expectation of a sales increase
- MRO goods, which stand for "maintenance, repair, and operational supplies," and assist the production process.
- Decoupling inventories, which are parts, supplies, or products held aside in expectation of a slowdown or halt in production.
- Buffer inventory, often known as "safety stock," serves as a buffer in the event of an unanticipated incident or the need for additional inventory.
Here are the ten most important tips for properly managing your inventory for increased profitability and cash flow management.
- Sort your inventory by priority.
- Keep track of all product details.
- Examine your inventory.
- Examine the performance of your suppliers.
- Use the 80/20 inventory rule.
- Maintain consistency in how you receive stock.
- Keep track of sales.
- You must order restocks.
- Invest in inventory management software.
- Employ technology that is easy to incorporate.