Stock and inventory control in an SME
One of the most complex management tasks for an SME is stock and inventory control, a process that can sometimes be an additional difficulty. In the following, we will analyse this part of business management.
Stock and inventory in a company
Stock and inventory are fundamental terms in the operations and logistics management of any company, and although they are often used interchangeably, they differ in their meaning and application.
Stock refers to the quantity of goods or products that a company has on hand at any given time. These products are ready to be sold or used in the production process. The term stock is often associated with the idea of reserve, i.e. the amount of product that is kept to meet future demand or to ensure a constant supply. Efficient stock management is crucial to ensure that the company can respond quickly to fluctuations in demand without incurring excesses.
Inventory, on the other hand, is a broader term that includes not only finished goods (stock) but also raw materials, components in the manufacturing process and other production-related items. Inventory represents the totality of a company’s assets that are intended for sale or production. Inventory management involves detailed tracking and control of all these items, ensuring that the company has the necessary resources at the right time and place, while at the same time avoiding excesses that could represent an additional cost.
While stock focuses on finished goods available for immediate sale or use, inventory takes a broader view of all of a company’s assets related to production and sales, including raw materials, work-in-process and finished goods.
Stock and inventory management, tips for SMEs
- Implement an inventory management system: It is advisable to have specialised software to accurately track inventory. This will help you monitor stock levels, sales, returns and deliveries efficiently.
- Understand market demand: Analyse sales trends and adjust your stock levels accordingly. Knowing seasonal patterns and changes in consumer demand will allow you to prevent both overstocking and understocking.
- Maintain a minimum inventory: Establish a minimum stock level for each product. This will allow you to reorder at the right time and avoid shortages.
- Optimise storage space: Organise your warehouse so that fast-moving products are easily accessible. This streamlines the picking process and reduces waiting times for customers.
- Conduct regular audits: Even if you rely on an automated system, it is important to conduct regular physical counts to ensure that the data in the system matches reality.
- Manage supplier relationships: Maintain good communication with your suppliers. Negotiate flexible delivery terms and quick response times to be able to react to unforeseen changes in demand.
- Apply the FIFO (First In, First Out) technique: Make sure that the oldest items are sold first. This is especially important for perishable products or products with an expiry date.
- Diversify suppliers: Don’t rely on a single supplier. Having multiple sources can be crucial in case of unexpected supply disruptions.
- Regularly analyse inventory performance: Evaluate which products perform best and which generate storage costs without providing an adequate return. This will help you make decisions about which products to keep in stock.
- Train staff: Make sure your employees are well trained in inventory management. A knowledgeable and efficient team is key to maintaining an accurate and efficient inventory system.
Stock management with digital tools
Working with a digital stock management system offers multiple advantages, starting with the accuracy and efficiency of inventory tracking. Human errors in counting and recording products are considerably minimised, thanks to the automation provided by this type of system. This ensures that stock information is always up-to-date and reliable, facilitating strategic decision making in terms of replenishment and product management.
Another significant advantage is the optimisation of time and resources. A digital stock manager streamlines processes such as receiving, storing and distributing goods. This translates into increased productivity and, consequently, cost savings. In addition, by having a clear view of inventory, overstocking or shortages can be prevented, thus improving purchasing management and long-term planning.
These systems offer valuable insights through data analysis. With a digital stock manager, detailed reports on sales trends, inventory turnover and customer preferences can be obtained. This data is essential to better understand the market, adapt business strategies and ultimately increase the company’s profitability.
If you are looking for a comprehensive management company for small and medium sized businesses that allows you to focus on your business, at Asesoría Orihuela Costa we offer you a team specialised in the financial and fiscal management of SMEs.
