Stock control is defined as: “The activity of checking a shop’s stock”
Many shops now use stock control systems. The term “stock control system” can be used to include various aspects of controlling the amount of stock on the shelves and in the stockroom and how reordering happens. Typical features include:
- Ensuring that products are on the shelf in shops in just the right quantity.
- Recognizing when a customer has bought a product.
- Automatically signalling when more products need to be put on the shelf from the stockroom.
- Automatically reordering stock at the appropriate time from the main warehouse.
- Automatically producing management information reports that could be used both by local managers and at Head office.
These might detail what has sold, how quickly and at what price, for example. Reports could be used to predict when to stock up on extra products, for example, at Christmas or to make decisions about special offers, discontinuing products and so on. Sending reordering information not only to the warehouse but also directly to the factory producing the products to enable them to optimize production.
Advantages and disadvantages
Stock control systems ensure that just the right amount of stock are on the shelves. If there is too much stock, it ties up a company’s money, money that might be better spent on reducing their overdraft, on advertising the business or on paying for better facilities for customers, for example. Too much stock means that some perishable products might not sell and would have to be thrown away and this would reduce a company’s profit. If there were not enough products on the shelf, they might run out. If this happens, they would lose business and again, profits would not be as good as they ought to be.
Stock control systems save a lot of staff time. Savings may be possible by reducing the number of staff needed in the business thereby improving profits. A stock control system will not remove the necessity for checking what is on the shelves regularly – things get stolen and these won’t be recorded.
Stock control systems also mean that a business may have to close down while the system is changed from a manual one. They may also involve a considerable investment in equipment and support. Stock control systems require training and some staff might find them difficult to use. They can also break down so a procedure needs to be in place so the business can continue to trade. This could involve further costs as well, perhaps requiring the purchase of backup equipment or a support agreement. Usually, the benefits of a stock control system outweigh the disadvantages.
An example
Imagine a shop that is part of a chain of shops. It has no computer systems. At the moment, the owner of the shop orders goods. This takes up her valuable time. She knows what to order by using her experience of how quickly things sell and by looking on the shelves and seeing what is there! She also has to produce regular reports about how the business is going for Head office. This again is very time-consuming. Headquarters decide to introduce a stock control system. One simple solution would involve getting:
- A method of scanning in products at the checkout.
- A computer with a modem.
- A phone line if they haven’t already got one.
- Some connections between the checkout and the computer and between the computer and the phone.
- Software.
- An ISP.
- Computer systems set up at the warehouse, the factory and Head office.
- Some training on how to use the system.
- Some support for when things don’t work.
- Back-up systems in case the computer breaks down.
