Taking control of Stock Control
There’s nothing more frustrating than seeing capital sitting in unsold warehouse stock.
Stock control can make or break your cash flow situation.
The last thing a business needs is a cash flow crisis. So what can be done to avoid one? Knowing everything about your stock and managing it efficiently. Avoid stockpiling excess stock in your warehouse. Over-estimating stock can leave you with all your money ‘sitting on the shelves’. Here’s some great tips on how to take the cash out of your stock and back into your pockets.
Know your stock needs.
You and your staff need to be aware of business stock level needs. It may help to think of necessary stock levels in terms of ‘stock days’. This is the number of days your business could hypothetically continue to sell based on your current stock levels. I.e. enough stock to last 60 days is 60 stock days.
Stock sitting on your shelves or in the warehouse for months at a time just ties up your cash and doesn’t help to generate revenue. It does the opposite. This is why you should aim to predict the amount of stock you need for a particular period of time – which is preferably the number of days in between orders.
Using the right numbers.
Take the time to calculate; stock days to prevent you from ordering stock too early or too late, average shelf life of specific products, and the profit margins on all your items. The more information you have on your inventory, the better your purchasing decisions. Being aware of customer buying habits makes it easier to run targeted campaigns to move certain stock.
This is especially true if your stock is made up of perishables such as fruit and vegetables or seasonal items. Having a system in place to forecast and cater for changes in demand will help you move stock and keep out of cash flow problems. This takes the guesswork out of ordering. The more information you can gather about your inventory, the better placed you are to make purchasing decisions that won’t harm your cash flow.
In general, stock control is approximately 90% organisation. If you keep paper-based stock records and that system works for you then stick with it. The main thing is that you are actively taking a role in stock control. However, this is not the case for many. Using paper-based systems leaves you vulnerable to a myriad of mistakes and issues: such as losing paper or human error. This is not the case with software based ordering and stock management tools. Their benefits including:
- All your information is recorded electronically so there’s no chance of order sheets lying all over the place or going missing or getting destroyed.
- You can get previous purchase records and price or stock level information on demand, which makes it easier to make informed decisions quicker
- Electronic order features show pictures of products, making it harder to order the wrong item.
Organisation isn’t just about the ordering process. You need to have storage systems in place so items don’t disappear when you need them most – or reappear just as after you’ve sent off another order.
Get your staff on board.
Make sure your staff are up to speed with the features of your inventory management software and know how important stock control is for your business. The last thing you want is to invest time and effort implementing a new system and have none of your staff use it because they don’t understand it.
Most business failures are due to cash flow problems. And cash flow problems often arise from mismanaged stock. That’s why it’s crucial to implement systems for managing your stock levels. It might take some time but they’ll stop your cash from being tied up in unneeded or slow selling stock. Optimise your inventory management processes and free up working capital which can be re-invested into the business.
MYOB Exo can help your business:
- Reduce overstock, increase cash flow
- Manage inventory & resources better
- Become more efficient & profitable
- And much, much more…
Get in contact with our ERP professionals today and find out just how much you could save with MYOB Exo. We have all sorts of stock solutions to meet all your needs – from easy to use apps to custom-built systems.