Efficient stock management may seem like a daunting task. Having the correct products in stock, ensuring you have got the correct stock levels and a strategy of what to do with those items that are not selling or for those lines that are new to store that need to be sold are all usual concerns.
In incredibly simple terms managing your stock is as important as managing your business bank account and should be dealt with the same level of care and attention.
For example, if you check your bank account weekly, monthly or quarterly then do the same with your stock levels. By doing this you will become aware of the stock items that are in stock and those that require reordering – it will also show you which products are selling and which are not. An efficiently managed stock control system is guaranteed to have a positive impact on your cash flow as you will not be ordering stock you do not require and looking at the reasons behind why certain items are not selling as well.
It is important to understand the average number of days you can hold stock for before putting it on sale and can vary dependent on your type of business. If you are in the hospitality industry you would hold food for probably no more than two to three days as the food would go off if stored for longer, but the retail industry selling clothing would be able to hold stock for much longer.
It is important to understand how many days' worth of stock you have and a simple equation can show you this –
Understanding your stock data will provide invaluable information which will aid you to fully interpret your specific patterns such as seasonal trends, good/bad locations for products and peak trading times. This information will help you plan ahead to ensure your stock levels are always where they need to be so you do not have excess stock of certain products and do not run short on good sellers. By doing this you should see your cash flow increase.