Businesses may be very diverse in the range of stock that they hold, however there is often similarity in the challenges faced regarding inventory management.
Inventory can take many forms, including raw materials, finished goods, goods for resale, consumables, or work in progress. Managing stock levels, capacity and procurement are key to successfully ensuring that your business is as efficient as possible.
Costs in addition to purchase costs need to be considered when evaluating how much stock to hold, such as shipping and freight, storage and warehousing, insurance and any financing costs.
Holding excess stock can be costly to a business, all this needing to be balanced against the chance of lost revenue for not having an adequate supply of stock (or the incorrect mix of product) to service your customer’s needs.
Consideration of obsolescence/expiry, product mix, customer demand, supply lead time, supplier terms and quality, minimum purchase quotas, effective storage, display… All these items can be hugely demanding for a business owner or management team to think about!
On top of this though, keeping track of your stock is an essential step.
Regardless of your chosen method of managing stock, keeping track of your stock is paramount. Use of technology is a clear winner in making measuring your inventory as efficient and painless as possible.
Many systems have automated assistance in-built, that go beyond just tracking of items and assist in the ordering/procurement, accounting, finance/forex and reporting aspects of stock measurement and control.
Using metrics from the reporting system can assist in setting target stock levels and turnover.
Using data from an automated system, having the accounting headache and manual processes removed from the stock ordering and management process in your business can be the factor that gives you the time and knowledge needed to ensure your stock is a strategic and financial advantage, rather than a burden.
Internal stock control procedures
• Policy – clear guidelines for staff involved in stock control and handling
• People – the right people with the right skills and experience
• Accountability – measuring and owning each step in the process
Measuring and tracking - having the right supporting software, that supports and integrates with your accounting software:
• Ostendo
• Netsuite
• Xero add-on partners such as Unleashed
Cutcher and Neale have numerous ways to assist with stock control systems and can support you in making the right selection for your business. Feel free to chat with your advisor or one of our team, who will be able to assist.
