Stock Control

Taking charge of Stock Control

In this post we look at the benefits of running stock management as part of an integrated Business Management Solution and discuss why it’s time to start getting serious about stock.

inventory management

Integrating stock control to your business’ workflow.

How long have you been depending on Excel, or your accounting system, to handle stock? For many businesses, the answer to that question is ‘too long’.

Excel is the default business administration tool – it can be used to accomplish a series of tasks, from invoicing and basic accounting and report building. The truth, however, is that it was never designed to do a lot of the things we use it for.

A year or two in, most businesses have invested in a purpose built system to take care of financials and provide a more robust audit trail. Where stock is involved, however, many wholesalers struggle on with tools that either simply aren’t up to the task, or require a great deal of labourious manual input.

You can’t run a warehouse with pen and paper.

This approach is all very well with a handful of jobs or clients, but if you’re a wholesaler and your business is expanding, there’s simply no way you can manage a warehouse with ‘pen and paper’. There are too many variables and too many hidden costs for that to be a profitable solution in the long term.

Stock Control

Taking charge of Stock Control

In this post we look at the benefits of running stock management as part of an integrated Business Management Solution and discuss why it’s time to start getting serious about stock.

Integrating stock control to your workflow.

How long have you been depending on Excel, or your accounting system, to handle stock? For many businesses, the answer to that question is ‘too long’.

Excel is the default business administration tool – it can be used to accomplish a series of tasks, from invoicing and basic accounting and report building. The truth, however, is that it was never designed to do a lot of the things we use it for.

A year or two in, most businesses have invested in a purpose built system to take care of financials and provide a more robust audit trail. Where stock is involved, however, many wholesalers struggle on with tools that either simply aren’t up to the task, or require a great deal of labourious manual input.

You can’t run a warehouse with pen and paper.

This approach is all very well with a handful of jobs or clients, but if you’re a wholesaler and your business is expanding, there’s simply no way you can manage a warehouse with ‘pen and paper’. There are too many variables and too many hidden costs for that to be a profitable solution in the long term.

Fortunately there is a better way. Integrate stock control as part of your business’ workflow and the benefits are quick to follow. Accurate, real time information on stock means less wastage, better response times for customers, more detailed intelligence on your most profitable lines and, ultimately, the freedom to focus on building your business.

Stock: the conundrum

As a wholesaler, it’s natural to want to stock enough to be able to meet customer demand. The trouble is, the more stock you keep, the more cash you have tied up in physical products. The more you have to spend on storage and insurance too, to protect against a higher chance of loss, waste or theft.

These costs can be justified if the stock is going to be sold. But how can you be certain it will be? What if it just sits on a shelf gathering dust?

stock boxes

This is where the visibility of an integrated business management solution comes into its own. With a full view of orders, accounts and stock movement, you are in a much more informed position when it comes to understanding which products sell best in which locations. And with this intelligence, you can stock your warehouse more efficiently.

Want to Take Control of Stock Control?

Knowing the true cost of your stock

Landed costs are all those niggling little costs associated with importing stock to Australia or New Zealand, such as brokerage and logistics fees, shipping costs, customs duties, tariffs, taxes, insurance and handling fees. They’re easy to overlook, but if you underestimate how much your stock is costing you to buy, there’s a danger of pricing your products too low and ending up with lines that fail to make any money.

If you’re only importing small amounts, you may just be a few cents out with your calculations and be able to redress the balance with surplus cash. But once you start increasing volumes, those margins of error can quickly turn into hundreds or thousands of dollars. That’s obviously a big concern.

The impact of exchange rates

To add to the uncertainty around landed costs, fluctuating exchange rates can potentially alter costs substantially – especially if you’re dealing with multiple imports. Even if you have accounted for all elements in your latest shipment, without up-to-the-minute currency information on hand, it’s impossible to know for certain what your final costs are.

One remedy is to leave a few thousand dollars in the bank as a sort of buffer, but ultimately that’s yet more cash tied up in stock that could be used elsewhere in the business. The better option is to use an integrated business management solution.

A lot of businesses don’t realise it’s possible to implement stock control and accurate import costing without spending a fortune. Not only is it possible, but the long term savings and efficiency improvements make it a sound investment.

Reducing human error

With an integrated BMS, every single cost is assigned to a particular job. This means that even just a quick glance at the latest overseas order reveals the total cost of each item of stock. As your costs filter automatically through the system, from sales orders through to invoices, there’s far less chance of information being omitted, duplicated, or entered incorrectly. In other words, a BMS removes that margin of human error.

Most BMS also update currency rates automatically, so a snapshot view of stock reveals the actual cost – not an out-of-date cost based on last week’s exchange rate. This gives you a chance to factor in those fluctuations on a daily basis and spread the impact a little more evenly.

Meeting customer needs

Another issue facing wholesalers is the difficulty of predicting customer demand. To a point, looking back at previous orders allows you to build a historical picture of your existing customers’ needs. But what if those customers’ needs suddenly change, or you receive a handful of new orders?

One way of dealing with this is to keep stock at component level and assemble to order. If you’re an electrical manufacturer, for example, it makes more sense to stock plugs as components and only assemble them into two or three-pin plugs once you know how many of each type customers need. This approach makes your business more flexible to customer demand, but only – and here’s the problem – if you know exactly what’s in stock at any one time. When you’re controlling stock using a system that’s based on a high level of manual input, that state of real-time visibility is very hard, if not impossible, to achieve.

+ A view of stock and sale as one

An integrated BMS instantly connects stock and sales as one. Your sales rep takes a call, looks in the system to check stock and confirms with the customer that the order can be fulfilled. As soon as the items are picked from the shelf, levels are updated and the next rep to take a call has up-to-date information on the amount of stock available.

+ Managing stock in multiple locations

The beauty of the BMS approach is that it works across locations, so you can make up customers’ orders from multiple warehouses. For businesses that do a lot of custom mixing this not only means you can respond to orders faster, but you can be much more flexible in the products that you sell in the first place.

Accounting for varieties and variations

+ Expiry date tracking

Traditionally, accounting software doesn’t allow you to record age. But if you stock perishable goods, it’s essential you know when those are about to expire. In BMS not only can you enter this sort of information but it’s possible to set up an alert when stock reaches a certain age. From that information, sales reps can prioritise the sale of soon-to-perish items and ensure that stock isn’t wasted in the process.

+ Batch tracking

Business management solution allow you to keep records of stock batches, which means you can ensure consistency across paint colours, food flavourings and so on.

+ Variable amounts

If you are using a general accounting system to track stock, it’s exceptionally difficult to account for variations – and that results in wastage.

A timber merchant, for example, might stock a piece of timber as a 3m length but only sell 1.8m of that to a customer. What then happens to the remaining 1.2m?

If you aren’t able to account for the off-cut, you almost certainly won’t know you’ve still got it – and it most likely won’t sell. With proper visibility, you can prevent these leftovers and clear your stock.

It’s all about the visibility

Because BMS combines stock control with accounting, you can track stock and costs as one workflow. This offers huge advantages over separate accounting and stock control systems. BMS enable you to view the ebbs and flows of each particular stock and help you spot the fast moving and most profitable lines.

A basic accounting system might tell a furniture wholesaler how many chairs a customer has ordered, but the visibility stops there. With an integrated BMS, the same wholesaler knows whether chairs are in the warehouse, in the paint shop, scheduled for painting, or complete and awaiting shipping. In short, an integrated BMS gives you a 360 degree view of your stock from your warehouse to the customer’s door.

Predicting future stock volumes

It’s not just short-term gains that you get from a BMS either. Because an integrated system records data on every purchase and every item of stock dispatched, it can be used to build up a picture of customer preferences and seasonal spikes. Over time, you can use that data to predict future stock volumes and make business-critical decisions.

Integration with third party software and technology

Businesses are understandably cautious about implementing new systems. Some worry that the software will become obsolete too quickly, or not be flexible enough to meet their needs in the future. But choose the right business management solution and you’ll be investing in software that’s flexible, customisable and capable of sitting alongside other third party systems as and when you decide to implement them.

You may not be ready to integrate a web ordering system right now, for example, but it’s a logical progression for many wholesalers. Not only does it allow customers to check for themselves whether an item is in stock before placing an order, but it enables you to dispatch products more quickly.

Other efficiency improvements that you may be considering include bar-coding and warehouse scanners. Even if you don’t need the ‘bells and whistles’ just yet, a flexible BMS will allow you to add new functionality when you’re ready. That means that with BMS, you’re effectively future-proofing your business.

Want to discuss your stock situation?

MYOB has a range of enterprise solutions for businesses looking to streamline inventory management and boost profitability. To further discuss how we can help you dramatically improve your business, please fill out the contact form and one of our team will get back to you.

Alternatively, feel free to call one of our MYOB certified consultants today on 1300 553 228.

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