Keeping on top of your stock can be a challenging part of the business process. Keeping on top of this with external factors always contributing is a challenge. There are always ways in which you’re able to improve your stock management procedures.
In this post, we will explore what exactly stock management is, the processes we go through in stock management, and what can be done to optimise this process, making it easier and more efficient to work with.
What is Stock Management?
The first thing we need to establish is exactly what stock management is. Stock management is the process of maintaining the correct amount of stock at any one given time, meeting the demand of clientele while simultaneously keeping logistical costs as low as possible.
A critical piece of the stock management puzzle is ensuring that you can avoid any stockouts or overstocking, keeping it finely balanced and manageable for the business. Stock management is a fantastic strategy that utilises tools, technologies, and processes to ensure stock is managed effectively and efficiently.
By using stock management strategies and tools effectively, companies can view their stock numbers in real-time while forecasting demand and making the most of the storage space they have.
There are always ways for companies to optimise their stock management systems. This post will explore the best ways your company could optimise your storage management, bringing efficiency and simplicity to your inventory systems.
Optimising Stock Management
1. Using Demand Forecasting
One of the most significant issues that companies face when managing their stock levels is not being able to look for patterns in their previous inventory records. By utilising the demand forecasting strategy and keeping your stock at a level that matches that of your demand at particular parts of the year, you can predict your busiest periods of the year.
The biggest advantage that this provides you with is that overstocking soon becomes a problem of the past with you instead being able to forecast busy periods and bring stock in, rather than holding high levels of inventory that take significant periods of time to offload.
By holding this kind of data, you make your life easier. You can make proactive decisions that are better in the interests of the business, improve supply chain efficiencies, and save money on both the stock itself and storage facility costs.
Inventory training can also allow you to make calculated decisions on when to hold sales or when you need to hire more storage space (if necessary).
2. Establishing Safety Stock
Sometimes things happen in business that are simply out of your control, and there’s nothing you can do about that. One of these things that companies deal with all the time is supplier issues. What do you do when there’s a sudden supplier issue, and you cannot get your hands on the stock you need?
Supplier issues are part of business and cannot be avoided, but precautionary measures for your stock management are a great way to nullify this risk. Safety stock is the term for surplus amounts of your product that are held in the event of a supplier emergency as a failsafe, so you can still send your stock out to clients.
To establish your amount of safety stock to keep as surplus, you can do the following. Work out your average daily use for a product, then multiply this by the average lead time (how long the product takes, in days, to arrive once an order is placed). After doing this, you will want to subtract this number from your maximum daily use multiplied by your maximum lead time.
The four things you’ll need to work out your safety stock are:
● Maximum daily usage.
● Maximum lead time.
● Average daily usage.
● Average lead time.
3. Carry out Inventory Audits
Suppose you struggle to keep track of your stock and often find it hard to get a grip on the numbers you need. In that case, regular inventory audits may be the correct route for you to go down. Regular inventory audits and the right storage procedures can help you keep track of your stock more effectively.
As well as closely monitoring the warehouse situation, businesses should keep a close eye on holding costs to ensure there are no significant anomalies between stock levels and these costs.
Carrying out inventory audits can also be an extremely time-consuming process. It is important to either manage your time effectively or hire professionals to carry out these regular stock checks for you. You free up your employees to focus on their individual jobs by doing this.
4. Distribute inventory across warehouses
Distributing your stock in the areas where your demand lies is crucial to your business being a logistical success. If your stock is closer to the area that your demand is, it is more accessible in that area and, as a result, will lower shipping costs and speed up delivery times.
This is an excellent idea for both retailers and service-based construction businesses, keeping equipment in different areas of high demand across the country if possible. If you can do this, you massively reduce equipment delivery times and can begin jobs quicker.
By monitoring demand across the area that you serve, you can make more calculated decisions on how much to store at each location based on demand.
Whether you’re a retail or service-based business, managing stock or equipment properly is crucial to the success of your logistical management. Whether you’re dealing with high seasonal demand or challenges with stock distribution, we hope you have found this article helpful with your stock management challenges.
If you have any questions about your stock management, please don’t hesitate to get in touch with our fantastic team here at TagTec. We are more than happy to answer any questions you may have and give you a helping hand.