Why stock control/ order processing/ logistics?
Are you tired of playing hide and seek with your stock?
What is Stock?
Stock can mean different things and depends on the industry you operate in. It includes:
• Raw materials and components from suppliers
• Work in progress or part finished goods manufactured/assembled within the business
• Bought goods ready to dispatch to customers
• Consumables and materials used by service businesses
Why Stock control?
We see stock control as an extension of CRM and also an efficiency tool. In order to sell the correct item to the correct customer at the correct time, you need to have some kind of system. If you are selling goods, you need to know what you have, where you have it, how much of it you have, what it is worth, how much are you expecting from suppliers, and all of this at any given time. A good Stock Control system will incorporate all of this making your business efficient and help you to cut significantly on administration and costs. You will benefit from improved stock holding, more effective purchasing, faster order taking, faster despatching and more.
Control your purchasing
A good Stock control system will contain a Purchase Order system that will suggest to you what to purchase based on what you have in stock and/or previous buying patterns. By checking your stock in and out, the system will always show the correct stock figure, so your sales people always know how many items they can sell at any given time.
Manage your inventory
Maintaining the right inventory levels can be a daunting challenge. If not properly managed, your inventory can result in a significant expense, and also loss of customer confidence. The cost of carrying too much inventory can easily become a major expenditure and require attention. The benefits of inventory control far outweigh the costs. Any reduction in inventories, whether it is raw material, work-in-process, finished goods or supplies, can have a dramatic impact on your bottom line.
A computerised inventory control system can also help you implement new inventory management techniques such as Just-in-time (‘JIT’). Using these techniques cut the use of company resources such as warehousing, equipment and personnel. However, these techniques require error-free environments and better control over inventory since the buffer zone to compensate for any errors is less.
In order to meet customer orders, product has to be available from stock. If a business does not have the necessary stock to meet orders, this can lead to a loss of sales and a damaged business reputation.
It is important therefore that a business either holds sufficient stocks to meet actual and anticipated orders, or can get stocks quickly enough to meet those orders. For a high street retailer, in practice this means having product on the shelves. However, it is expensive to hold too much stock.
The costs of holding stock can include:
• The opportunity cost of working capital tied up in stock that could have been used for another purpose
• Storage costs – the rent, heating, lighting and security costs of a warehouse or additional factory or office space
• Interest , if the stock is financed by an overdraft or a loan
• Risk of damage to stock by fire, flood, theft etc; most businesses would insure against this, so there is the cost of insurance
• Stock may become obsolete if buyer tastes change in favour of new or better products
• Stock may perish or deteriorate
How do you go about selecting a computerised inventory control system?
First, such a system should be bought rather than developed in-house. With the purchase of an already available software package, you can focus on getting the benefits of the system immediately rather than waiting until the development and debugging is completed. Also, the documentation and training materials will generally be available immediately when a software package is purchased. Buying a software package is not easy, considering that there are many choices available in the marketplace.
When choosing a new system, consider the following:
Ease of installation and operation, ease of use, vendor’s reputation, local troubleshooting and consulting support, quality and availability of documentation and training.
What can you expect a computerised inventory control system to do once it is in use?
The package should be capable of certain key functions. The system should allow for reporting and tracking of all items in stock. In the case of a manufacturing company, this includes the raw material, sub-assemblies and other work-in-progress, finished goods, tools and supplies.
In particular, the system should:
• Maintain an item master file for the company
This file keeps all pertinent information on each item to be controlled: part number and description, detailed information such as preferred and actual locations and shipping weight, reorder point and recommended reorder quantity and cost information such as standard cost, actual cost and sales price.
• Process the inventory within the company
Such activity includes the material issues, receipts, shipments, transfers, returns, rejections, inspections and scrap. The system should enable the transactions to be processed live, with immediate updates. The system should also provide the capability to track inventory levels and activity for multiple locations within the company.
• Facilitate purchasing
The system should provide reports of items at reorder points in case of companies not using material requirement planning ("MRP") systems. Ideally, an automated report that will suggest the required purchases to be made to greatly assist staff.
• Provide adequate inquiry and management reporting capabilities
The system should provide inquiry into the stock status by different locations, inventory value by different location and descriptive information for each item. The information should be obtainable on the screen from different computer terminal locations.
The system should be capable of generating numerous operational and management reports such as:
- Stock status report
- Stock aging reports
- Tracking serial numbers, batch numbers, and/or best before dates
- Inventory movements report
- Recommended purchases report
- Parts history report
A computerised inventory control system can be a big asset to a company, whether large, medium or small. These systems can help the management in controlling the inventories of the company to cut significant costs and have a dramatic impact on the financial bottom line of the company. Do you need one? Call us!
Is Visma the right Stock control software for your business? To find out click here.