Managing your stock
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.