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Stock Management

8/17/2018

Stock Management

Stock represents tied-up capital. So efficient stock management enables a business to free-up capital by keeping stock at a reasonable level and balancing the need for surplus supplies with the need to reduce tied-up capital. And to prevent overstock, stock management is very necessary for every company.

There are two kinds of stock management: periodic and perpetual stock management.

Periodic stock management: this management requires physical stock accounts at specific intervals. This method  is suitable for small businesses with minimal stock and is much cheaper than electronic tracking systems. However, this method is not suitable for large companies with extensive inventories because physical stock takes are time-consuming.

Perpetual stock management: this system relies on electronic tracking and POS systems, to record and track stock on a continual basis. This is a more expensive system than physical stock counts, but it gives a more accurate and up-to-date indication of stock levels and removes the risk of human error.

Someone may ask when to reorder for new stock. Of course, you want your shipment to arrive just in time… ideally when your previous stock is about to sell out. If it arrives too late, you’ll be forced to announce that you’re out of stock. If it arrives too early, you’ll be looking for space to store these items. When it comes to calculating your reorder point, you need to account for the time it takes to get your items picked, packed and shipped (lead time).

There is a principle that most people knows: First-In First-Out (FIFO). It means that your oldest stock (first-in) gets sold first (first-out), not your newest stock. This is particularly important for perishable products so you don’t end up with unsellable spoilage.

It’s also a good idea to practice FIFO for non-perishable products. Take electronic components as a example, the products changes quickly over time. In case that you end up with something obsolete that you can’t sell, you must sell the oldest stock first. And some parts would be malfuntioned if been kept in warehouse too long.

In order to manage a FIFO system, you’ll need an organized warehouse. This typically means adding new products from the back, or otherwise making sure old product stays at the front. If you’re working with a warehousing and fulfillment company they probably do this already, but it's a good idea to call them to confirm.

IF you already be stuck with lots of extra stock, and you want to clear up them, you may sell the stock to our company. Send the list to purchase@excesschip.com or upload it on our website. We would reply you within 24 hours.

Thanks for your reading.