What is a stock control system?
Also known as inventory control, a stock control system is a crucial part of any business, used to effectively and continuously track, manage, and record the availability, movement, and sales of goods in a warehouse. This applies to every item in the warehouse, from raw materials to finished goods, from ordering through receiving, warehousing, movements, sales, shipping, delivery, and returns.
An effective stock control system helps warehouses to become more efficient and profitable. It also provides real-time information for business decisions via Business Intelligence (BI) functionality.
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What are the two main types of stock control systems?
Periodic inventory system
As the name implies, this system is used periodically to do physical inventory counts to keep track of stock and transactions.
This is a very simple system for small businesses and does not require sophisticated software. Once the physical inventory count has been completed, the balance in the purchase account is transferred to the inventory account and matched to the cost of the remaining stock.
Matching the cost of inventory can be done either using FIFO (first in, first out) or LIFO (Last in, first out) calculations.
Clearly, this system has many limitations and is labour-intensive. It also does not effectively control inventory discrepancies, stock loss, fraud, and theft.
Perpetual inventory system
Using sophisticated software like ProSku, warehouses keep track of detailed inventory in real-time and complete accounting records at all stages of the process, which are available at any time, from anywhere on a smart device.
You will always know exactly what stock is on hand to meet demands, where individual stock items are located at that moment, which items sell the best, and which items need to be replenished to avoid running short of stock.
Challenges that need to be addressed include equipment failure, improperly labelled items, incorrect scanning, and reverse inventory management.
Key principles of effective stock control in inventory management
1. Correct stock levels
A very important part of effective stock control and managing cash flow is to optimize inventory by knowing what stock to buy, how much to buy and when to buy it to ensure there is always an adequate amount of goods to meet customer demand, reduce holding costs and excess stock, and increase efficiency. Aligning your inventory management system with JIT practices (Just in Time) helps you optimise space and avoids both shortages and overstocking.
Various factors influence forecasting how much stock to buy of any particular item:
- Perishable items.
- Market trends.
- “Hot” items with quick turnover.
- Seasonal or cyclical demand.
- Value of individual items relative to demand.
- Warehouse flow.
- Cash flow.
2. Review storage capacity and carefully plan the floor and storage layout
This is the first step in creating efficient workflow and time management in managing and tracking inventory. Stock can be compartmentalised with totes, bins, dividers, or other methods to make identification easier and thereby enhance productivity.
Provide maps of the various storage zones and install clear signage. Regularly reassess storage capacity and layout to avoid dead space or inefficient workflow.
3. Prioritise the location and accessibility of stock
Based on factors such as high demand, high margins, quick turnover, and both all-year-round and seasonal popularity, the stock should be well organised and accessible to minimise the time staff spend fulfilling orders.
4. Assign inventory management responsibility to stock controllers
In larger businesses, separate inventory management responsibilities are assigned to specific individuals, experience has shown that they take ownership of their tasks and are more likely to be more familiar with their inventory and focus strongly on their role in the process.
5. Correctly identify and label all products
Correct barcoding or other labels ensure accurate stock control and order fulfilment. Labels should contain as much information about the product as possible, including product name, number, quantity
Labels should have enough data such as product name, number, description, quantity, description, manufacturer, supplier, procurement date, expiry date, and any other information relevant to effectively identifying, locating, and accessing stock items.
6. Monitor and track stock movement
Accurate record systems are crucial to the effective functioning and profitability of a warehouse.
Optimise process flow for storage and retrieval and automate the stock control system as much as possible to instantly update all documentation. A WMS such as ProSku will collect and organise data, automatically updating all records to give complete transparency of all processes to help you accomplish your business objectives.
7. Set a cycle count schedule
If stock levels are not automatically updated by your software system, determine a viable cycle count timetable that helps to adequately monitor product flow, without unnecessary labour costs. It also reduces the stress and costs of financial year-end stock takings.
8. Get rid of superfluous stock
Stock items that do not move for any extended period might increase your holding costs beyond the resale value of the stock. Get rid of excess or superfluous items using promotions, special sales, or offering discounts.
Where there is no longer a demand for a product, consider ways to recycle them or ultimately dispose of them most cost-effectively.
9. Quality control
Check the condition and quality of the new stock before accepting delivery, in particular perishable or fragile goods.
Continue to do quality checks throughout the process of stock movement and fulfilment of orders.11. Create back-ups of your inventory data
10. Data security and backups
Protecting the integrity and confidentiality of your data from cyberattacks, lost information, and compromised data will safeguard your warehouse against financial loss and ensure you preserve customer trust and loyalty.
ProSku is a cloud-based WMS that uses cutting-edge technology with several levels of the latest security measures, to ensure your information is safe and instantly available at any time, from anywhere, on your smart device for optimum business decisions.
11. Educate staff on how to improve stock control
Well-trained staff help minimise errors and optimise efficiency. Getting input on stock control and location from staff who work with this daily is always a good idea as they are often best equipped to identify inefficiencies and wasted time and effort.
12. Automate stock control with advanced cost-effective WMS software
Most warehouses manage their stock control as an integral part of WMS software such as ProSku. The software automatically tracks, updates, and organises inventory, including automated ordering within predefined PAR (periodic automatic replacement) parameters that determine the optimum amount of inventory for any particular item.
Barcode scanning inventory systems
Barcoding is a highly efficient method of identifying and controlling stock levels. All the essential information about the items is stored on the barcode label and by scanning the barcodes, you instantly have all the information about the item, and if coded, remaining stock levels, optimum stock levels, and so on.
RFID (radio-frequency identification) inventory control
Larger warehouses with vast volumes and complex inventory needs find RFID an even more effective method of controlling stock. Entire batches of inventory can be scanned, using radio waves
Increase stock control efficiency with advanced WMS software
Stock control is no simple matter. It requires continuous maintenance and can become very labour and time-intensive.
ProSku cloud-based WMS helps a warehouse perform at its best by automating workflows, optimising stock control, and managing inventory location and movement.
Get in touch.
Contact us for expert advice, a demo, or an introductory chat. You can call us on 0800 170 1161 or book a demo here: https://www.prosku.com/contact-us/
