Stock Control for improved efficiency and profitability

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Stock Control for improved efficiency and profitability

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When a small business starts up, the primary focus for obtaining stock is the hope that they can then sell the items on and start getting income – and hopefully profit and cash!

But managing your stock control can mean so much more i.e. improved sales, streamlined operational running, increased cash flow and potentially even less need for additional borrowing and credit.

“Why do today what you can put off until tomorrow?”

A friend of mine set up an e-commerce business over 10 years ago. It has grown organically over the years, from just needing a garage for storing the products to needing 2 warehouses packed to the rafters to fulfill all of the orders.

When I met him, the accountant in me couldn’t help but be curious about the business, asking key questions like;

  • What’s your best selling product?
  • How much stock do you hold?
  • How many products do you stock/sell?
  • With the long supplier lead times, how do you know when to reorder and what quantity?

There were many more questions, he must have felt he’d suddenly met the Spanish Inquisition, but for me these seemed perfectly natural things a business owner must need to know to make the business work and keep cash coming in.


Surprisingly though, the answers were woolly at best and so my next obvious question was ….. why don’t you have a stock control system?

The response here was one that is very common and not only in small business, that it was not needed/too much hassle/too costly – maybe something for next year, but not now.

“Why did I not do this sooner!”

My questions did sow the seed and within 18 months my friend had gone through trialing a couple of stock control systems and was well on the way to getting one embedded into the business.

Yes there were the usual system implementation glitches with getting the products uploaded in, getting staff used to the new way of recording sales, stock arrivals etc. but it has made a massive difference to the operational running.

He can now tell you at the touch of a few buttons that he has 652 product lines and his total stock value at wholesale price is £250,000, retail stock value of £800,000. Purchase orders to suppliers are processed straight from the system and staff can set minimum reorder quantities so that even given the long lead times the shelves are never empty.

Other benefits include competitive edge and increased profitability through;

  • Analysing trends and demand to reduce inventory investment
  • Real-time stock reporting for faster, better decision making
  • Increased stock value accuracy
  • High service levels as never “out of stock”
  • More efficient preparation for busy periods
  • Warehouse space maximised for stock turnover
  • Identification of “sticky” unsold products that can then be discounted – turn stock into cash

And his response now it is all set up? “Why did I not do this sooner!”

Stock control

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