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This post is one in a series designed to help SME businesses benchmark their business and create a best practice business improvement plan across all of their business processes.  You can find the links to the full series here.  

image of stock controller taking stock inventory in a warehouseWhy is best practice stock control so important to a successful, profitable business?

Stock forms an important part of many business operations, as it’s; what you sell, what carries your margin and in some cases, even defines your business and its brand.

Stock forms an important part of many business operations, as it’s; what you sell, what carries your margin and in some cases, even defines your business and its brand.

Stock however, does have its dark side as well; it can cripple a business with poor management through loss or obsolescence, can drain working capital with a poor trading cycle and it can also rob profits with ill-considered logistics.

So, the question is really, how well does your Stock stack up?

 

How does your business measure up?

Here’s a checklist to help you determine the effectiveness of your stock control practices.

Stock Selection

  • We align all of our stock purchases to our overall business strategy – ensuring the correct type and style of product.
  • Our stock selections are aligned to our defined target market/s.
  • We have evaluated our stock lines for market sale volumes and available price margin to ensure that we can gain a suitable return.
  • As part of our stock selection process, we consider “up-sell” and “cross-sell” opportunities with our existing stock lines.

Supplier Dependency

  • We have a diversified range of suppliers, with no single supplier providing more than 20% (by value) of our stock.
  • Due to our diversified supply options, we have been able to negotiate balanced/fair supply terms.
  • In the event of a supplier failing, we have already identified at least one suitable replacement supplier so our business is not put in jeopardy.

Stock Management

  • We have comprehensive stock management systems in place to monitor our stock days on hand, by product/product category.
  • Our cash cycle has been mapped and we understand the importance of our stock holding component.
  • We use stock reporting to track and monitor stock for optimal quality and ranging decisions.
  • The value of our stock holding is fully understood and we actively manage our investment for the greatest return.
  • Formal security, obsolescence and stock handling processes are in place to minimise the devaluation of our stock holding.
  • We have a close understanding of our stock logistic costs and actively work to keep them down.

Margin

  • By stock item, we undertake regular checks to ensure that our expected margin is being received.
  • We are making sufficient margins from our stock for the sustainable viability of our business.

 

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