Consultants in Logistics

Time To "Spring Clean" Your Stock?

Time To "Spring Clean" Your Stock?

To manage stock effectively, businesses are required to find a balance between the cost of holding stock and the benefits from doing so. An optimised stock holding strategy has significant sales opportunity, customer service, and working capital benefits. As demand and skus change, this balance can become disjointed and businesses should periodically take a critical look at the stock that they are holding. Whilst successful stock optimisation strategies vary enormously across business sectors, the costs and benefits are broadly the same.

Costs of inaction will include actual or opportunity costs, storage costs, insurance costs, obsolescence and write down costs.

Benefits typically include the correct levels of stock availability to meet customer demands and provide differentiation over the competition. As well as a reduction in working capital and operational overheads.

Implementing a successful stock optimisation strategy requires a careful review of several factors including:

  • Product margin versus stockholding cost
  • Current and projected future demand
  • Current MOQ’s and opportunities to change
  • Order lead time on manufacturer or supplier
  • Certainty of supply relating to supplier performance
  • Customer fulfilment requirement and expectation

Even when a business believes it has reached optimisation, stocks will need to be constantly reviewed against sales to ensure agile stock profile is achieved.

Other changes that can be introduced include requesting suppliers to hold and ship stocks directly to end customers and introducing robust perpetual inventory (PI) checking processes.

If your business is considering embarking on a stock optimisation programme and requires help and support in designing an appropriate future stock strategy, or just wants help with completing a review call us on 01327 349090. With many years of experience in the field of stock optimisation, we can help your business to achieve the best of both worlds by reducing inventory costs and increasing sales & service.

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