Stock management is more than simply monitoring the lower limit of the stock. It is the art of using available space as efficiently as possible to minimise costs and maximise profits. At the same time, stock management is related to in-store sales, supplier behaviour and consumer reaction to an out-of-stock product. The following four tips will show you how to optimise your stock management.
1 Define the lower limits as specifically as possible
For optimal stock management, it is important to set the lower limits for the stock as specifically as possible. Lower limits can already be determined at product level, but it can still be beneficial to determine these lower limits as accurately as possible. At minimum at product level, but preferably also as a function of its specific properties, such as colour or the content of the packaging. You can do this by calculating the service level for each product. This is not a simple calculation. For some products, there may be a viable alternative available when a product is out of stock. Unfortunately, an alternative is not available for all products. If stock level of a product without an alternative is reduced, your company runs the risk of the customer searching for the product at a competitor, and may never return to you.
Defining the lower limits of different products as specifically as possible prevents the loss of (potential) customers. If necessary, let an expert assist you in calculating the service level; you can also use the commonly accepted figures for your sector.
2. Specify the perfect series size
The price per product is usually lower when you buy in bulk. At the same time, having a larger stock can also mean extra costs. Finding a healthy balance in batch quantities is not only influenced by the outflow of the product, but can be interconnected with other products you have in stock. After all, each space in your warehouse can only be filled once. Lack of space can affect your consideration towards the batch quantity. Buying one particular product in a larger quantity may therefore become an attractive proposition.
3. Be critical of your range
A wide range of products attracts customers. However, you can also give the customer too much choice by offering too wide a range. After all, a wider range is not always necessary. Customers like to have the choice between twenty kinds of breakfast cereals, but do not always have specific requirements when it comes to, for example, ready-made fish sauce; the customer is already happy that you offer this product. In this case, a smaller selection ensures that customers revert to the basic product and, thanks to these logistical savings, no turnover is lost. The reverse is also true: it can pay to offer your customers an additional option. If you offer brand A in addition to brands B or C, you will ensure that you sell more and do not lose customers who prefer brand A.
4. Quality is paramount – also for your suppliers
For optimal stock management, it is important that you have a good working relationship with your suppliers. After all, suppliers are responsible for delivering the required quantity of products and orders on time. If you have a good relationship with your supplier, you can use JIT deliveries to limit the pressure on your warehouse while maintaining your stock levels. To do this, it is important that you have a complete overview of your suppliers, their prices and their delivery reliability. For example, a more expensive supplier with a higher delivery reliability may prove to be a more attractive party for your business, especially for products with a high service level.