Stock Control

STOCK CONTROL ANALYSIS


Stock control, also known as inventory control, shows how much stock you have at any one time, and how you keep track of it.

It applies to everything you use to produce a product or service. It covers stock at every phase of the production process, from purchase and delivery to using and reallocation the stock.

Everything used to make a product or control a business is part of stock.

There are four main types of stock:

• Raw materials and components - ready to use in production
• Work in progress - stocks of unfinished goods in production
• Finished goods ready for sale
• Consumables - for example, fuel and stationery

A stock control chart is a graphical illustration of stock management over time. This diagram is normally shown as if sales were steady throughout each month.

The key features of Stock Control Charts are:

Maximum stock level – this is the maximum amount of stock a business would wish to hold. This could be enough stock for a month, week or year, it might be as much as a storage facility has space for, or it might depend on the order size needed to gain discount – known as the Economic Order Quantity (EOQ).

Re-order level – this acts as an activation  point, so that when stocks fall to a level, another order should be placed. This helps take account of fluctuations in sales levels over time.

Lead time – the amount of time between placing the order and receiving the stock.

Minimum stock level – this is the minimum amount of product a business wants to hold in stock. Assuming the minimum stock level is more than zero, this is known as buffer stock.

Buffer stock – an amount of stock held as a contingency in case of unexpected orders so that such orders can be met and in case of any delays from suppliers.




HOW CAN STOCK CONTROL BE IMPROVED

• Set minimum re-order levels
• Record every sale of a stock item
• Check your records before you make any promises 
• Keep on good terms with your suppliers
• Treat the customer courteously
• Don't let stock pile up