Managing your stock

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Last updated on March 18, 2015

Managing your stock or inventory involves more than doing an annual stocktake.

Holding stock is a costly exercise.  Your costs include interest on funds invested, storage facilities, staff costs, insurance, deterioration and losses.

Here are some things you can do to manage your stock efficiently.

  • Apply the 80/20 rule – 20 per cent of stock is likely to generate 80 per cent of sales and 80 per cent of sales are likely to come from 20 per cent of customers.
  • Document all orders for stock - this will help you to decide whether you really need it.
  • Say 'no' – if you don't think an item will sell, don't buy it.
  • Establish an adequate system for monitoring your level of stock.
  • Conduct stocktakes regularly.
  • Determine the optimum level of stock for your business.
  • Establish re-order points for replenishing stock items.
  • Make adjustments for changes in customer demand when planning orders.
  • Familiarise yourself with suppliers' delivery capabilities.
  • Order in the most economic quantities.
  • Take advantage of purchase discounts
  • Keep track of slow-moving stock.
  • Spot potential fast-movers.
  • Balance your stock by price, line, colour, size and type.
  • Select stock with your target customers in mind.
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