![]() ![]() In the reverse situation, if your demand decreased, you might not have enough storage space, incur additional storage costs, and lose money from inventory not selling, spoiling, or breaking.Ĭlearly, having an efficient stock management system in place to gage inventory at every stage empowers your business to react immediately to changing circumstances. If you were to continue in this manner when demand increased, you would find yourself running out of stock, holding up production and losing out on potential sales. If your demand were steady year-round, you would continually order just materials required to produce the number of products sold. In most industries, demand varies by season or trends, so requires frequent examination to recalibrate production to the right amount. Profitability of any product-based business model relies heavily on balancing production with demand. Why is Stock Management Software So Important to Your Business? The tools you use to manage these steps are vital to staying apprised of the condition of the business through accurate data, costs, and access to in-depth, analytical reports. In between, the many steps involved determine the success of the company. To do this effectively, your business needs to track all the information and movement from the time materials arrive through delivery to the customer. Whilst this is a more expensive system than physical inventory counts, it gives a more accurate and up-to-date indication of stock levels and removes the risk of human error.Stock management entails overseeing every item used to create products including materials, work in progress, finished goods, costs, labor, etc. ![]() Perpetual stock management: this system relies on electronic tracking and POS systems to record and track inventory on a continual basis. However, it’s not suitable for large companies with extensive inventories because physical stock takes are time-consuming. This method is suitable for small businesses with minimal inventory and is much cheaper than electronic tracking systems. Periodic stock management: this system of inventory valuation requires physical inventory accounts at specific intervals. periodic stock managementįor small businesses, there are two main approaches to stock management: periodic and perpetual stock taking. This could help you plan for and fund the replacement of stock if cash flow is limited. For example, if you categorise stock according to value, you could have categories for low, medium and high-value stock. You may choose to divide your stock into further categories. Work in progress: unfinished goods that are still in productionįinished goods: items that are ready for saleĬonsumables: stock that will be used in the daily running of the business and will need updating, for example, fuel and stationery Raw materials and components: stock that is ready to be used in the production of goods There are four main categories of stock or inventory: This helps keep stock at a reasonable level, balancing the need for surplus supplies with the need to reduce tied-up capital. Inventory is a major asset that represents tied-up capital managing stock effectively enables a business to free up capital.Įfficient stock control requires understanding the mix of different kinds of stock and acknowledging the demands on that stock. ![]() Stock management may also be called stock control, inventory management, or inventory control. In other words, stock management covers every aspect of a business’s inventory. Stock management applies to every item a business uses to produce its products or services – from raw materials to finished goods. Stock management is the practice of ordering, storing, tracking, and controlling inventory. ![]()
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