Principles Of Stock Management

Excess stock represents capital (or money invested) which is not earning any returns. The profit comes from the turnover of goods and hence of the money invested in the stock.

The key to balancing supply with demand is stock control. This is the effective management of the flow of merchandise in and out of the store. It is the coordination of the supply, physical condition, storage, distribution and recording of merchandise. Stock control keeps Management informed on the status of merchandise. It allows them to identify goods in demand so they can meet customer needs. It helps them regulate the amount of stock, so they do not tie up capital in excess stock. It permits them to organize stock so they can devote the maximum amount of storage space to selling while maintaining easy accessibility to stock in the warehouse.

Whether simple or sophisticated, stock control systems are designed to track the movement of merchandise from the point of order to the point of dispatch. They identify the status of merchandise for a certain period, such as a month or a year and give management at-a-glance information on the status of goods at a specific date, such as the end of the month.