Do you make stock-taking a priority or are you are selling blind?
However big or small your business is, you will, at some time or another have to deal with logistics. We often think of logistics as being to do with processes for supply (such as haulage and freight) but it really covers the whole organizational process. Therefore, tasks such as stock taking (or making an inventory) are essential to streamlining how the process fits together and ensures your customers have a good experience and your organisation sees maximum profits.
Why is stock-taking so important?
Stock-taking may sound like an “add-on exercise” that is more to do with accountancy and balancing the books than it is to do with creating a streamlined supply process. The fact is – without it – you are selling blind.
Stock-taking helps with these 4 main areas:
1. Budget: Every company has an overall budget and within that budget, sub-budgets are ring-fenced for specific activities. Stock-taking gives you a precise understanding of how much cash you have in stock at any one time.
2. Supply and demand: In the same way, by comparing supply with demand and how much stock you will need as a resource, you can ensure that you will always have a good cash-flow. Most businesses will experience a changing demand. This may be due to seasonal influences or market forces, but it will mean that the task needs to recognise these variations. For these reasons, stock-taking happening just once a year really is the bare minimum. If demand is highly changeable and you can estimate when those changes are likely to be then it is advisable to carry it out at those specific times as long as it does not interfere with trading processes.
3. Cost-efficient: Once you have a clearer idea as to what stock you have, how much cash is going into that stock and when demand is likely to rise and fall, you can be more precise as to what is likely to be a cost-efficient time to order or replace stock.
4. Shelf-life: Another reason stock-taking is beneficial is to do with shelf-life. Different industries will offer products which have storage restrictions. If stored too long a valuable product may simply become waste. For instance, food products are likely to have a use-by or sell-by date. Once these dates have passed these products cannot be passed on to retail or to a distributor. However, those products picked up in a stock-take close to the use by date can be given priority. Processes can also be developed to ensure shelf-life is taken into consideration in the overall system.
Another example of restricted shelf-life is a product which has an element of high-technology. The problem with these products is they can become outdated so quickly because technology moves so fast. However, if you acquire a clear idea of the unique specifications of your stock, you can not only streamline supply and demand you can also create price indexing systems to encourage sales when a model may become out-dated (though still useful).
Stock-taking fast and simple
An important factor is finding the right time to do your stock-taking. As mentioned above, it is good to recognize times when there is likely to be changes in demand – but it always needs to be a quiet time as far as your business is concerned. You do not want to be counting peanuts when you need all hands on deck getting the product out to the customer. Set a firm date and time and be disciplined. Keep to those times and ensure you (or anyone else taking part) will not be interrupted. Preparation is so important here and it is also essential that everyone within the supply chain (whether they are taking an active part in it or not) know when it will be taking place.
Take current orders which may not have been processed into consideration
You need to make sure your stock records are up to date. If they do not take into account the most recent orders then any figures which result are going to be based on skewed statistics. When counting products there are likely to be discrepancies, so make sure you can account for any differences which at first may seem irregular. It is at this time you should also make note of any stock which has either become obsolete.
Make sure all employees are recording to a set template
If there is more than one person committing to the exercise make sure that each employee is working to the same process. For instance, how will you record stock that is made up to create a master product be counted? Everyone needs to offer the same commitment: laziness, making estimations or assumptions can sabotage the whole exercise.
Finally, and perhaps most importantly make sure that everyone feeds back on their experience. This will encourage improvement for the next stock-take.
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