STOCK CONTROL AND INVENTORY

INTRODUCTION:

Stock control otherwise known as inventory control is undertaken to show how much stock you have at any point in time and how you keep track of it. It applies to how much stock you have at any point in time and how you keep track of it. It applies to every item you use to produce a product or services. It covers stock at every stage; from purchase and delivery to using and reordering the stock.

Efficient stock control allows you to have the right amount of stock in the right place at the right time. It ensures that capital is not tied up unnecessarily.

HOW MUCH STOCK SHOULD I KEEP?

Deciding how much stock you keep depends on the size and nature of your business and the type of stock involved. If you are short of space, you may still buy stock in bulk and negotiate with your supplier to store it calling it off as and when needed though meeting stock needs can be complicated and expensive if you employ this method. You might even run out of stock if there is a hitch in the system and you are fully dependent on the efficiency of your supplier. This is only advisable where replenishing is quick and easy.

Keeping a lot of stock may be easy to manage. You will never run out of stock and buying in bulk may be cheaper but remember that the stock may become obsolete before they are sold and it might tie up your capital

This model might work if sales are difficult to predict and it is hard to pin down how much stock you need and when

Therefore, to determine how much stock to keep, you need to ask yourself the following questions;

A.   How reliable is the supply and are there alternative sources available?

B.    Can you predict demand?

C.    Is the price steady?

D.   Are there discounts if you buy in bulk?

When these questions are answered, you would have decided how much stock you should keep.

WHAT METHOD SHOULD I ADOPT IN INVENTORY CONTROL?

There are several method of controlling stock, all designed to provide an efficient system for deciding what, when and how much to order. You may opt for one method or a mixture of two. You can keep track manually or use computer software. Anyone you choose must enable you to;

A.   Track stock level

B.    Make orders

C.    Issue stock

The simplest manual system is the stock book which is suitable for small businesses with few stock items. It enables you to keep log of stock received and stock issued out. Stock cards are used for more complex systems. Each type of stock has an assorted card with information such as Descriptions, Locations, and Quantities, Re-order level, Supplier details and Code numbers to classify the items.

Computerized stock control systems run on similar principles to manual ones but are more flexible and information is easier to retrieve. You can quickly get a stock valuation or find out how well a particular item of stock is moving. This method is a good option for businesses dealing with many different types of stock. Other features include purchase order processing, sales order processing, automatic stock monitoring, triggering orders when re-order level is reached. Automatic batch control if you produce goods in batches. Bar coding systems which speed up the processing.

Stock can tie up a large slice of your business capital so accurate information about stock level and value is essential for your company’s accounting. Figures should be checked systematically either through regular audits of stock or stocktaking- an ongoing program of checking stock.

STOCK TAKE PROCEDURES

When you perform a stock take, the first step is to take a physical stock take, counting each of your items to ascertain what is physically on hand. This is usually done at the end of the financial year. This is no more advisable as it is better to perform your stock take on a regular basis.

When you first set up your data file, if you had stock on hand you would have used the Count Inventory Window to enter your inventory opening balances. The same principle is applied every time you perform a stock take.

PHYSICAL STOCK TAKE

Before performing your physical stock take, you should print the Inventory Count Sheet. Print this report and then use it to write down the units on hand when doing the physical stock take.

After performing your physical stock take, enter the stock take figures:

Ø  On Hand: Shows the current stock quantities

Ø  Counted: This is where you enter your stock take figures

Ø  Difference: The difference between the On Hand column and the Counted Column

This should form your report and there are any discrepancies, you should try to trace it.

There are many tasks associated with stock control depending on the size and complexity of your business. Whatever method you may choose in the control of your stock should be able to yield accurate figures.

Efficient stock control determines your success in that business.