Stock Management is more than just a stock control system, you need to take a holistic approach covering;

  • Stock control
  • Supplier relationships
  • Supplier trading Terms
  • Logistics external
  • Order management
  • Promotion order management
  • Opportunistic buying and deal management
  • Product database management
  • Strategic stock and cash flow modeling
  • Theft, shrinkage, expiry and breakage

During the creation of my first stock control and ordering software I spent many years working in a pharmacy back office. Many hours were spent drilling down on the issues and failures of stock control systems. I realized very quickly a holistic and strategic approach to stock management was required, not just a control system.

Strategic Stock Management Approach

  • Define your retail model
  • Calculate your target stock turn
  • Calculate your capital requirements based on stock turn and allowance for downturn in sales and any seasonality
  • Using the above define your ordering systems to align with in store logistics and external supplier delivery cycles
  • Refine and implement systems based on the above policies

A strategic approach to stock control sets the policy (i.e. ground rules) making execution easy. When new products or range extensions occur the policy provides guidance from a strategic view point.

Case Example

Our sample company Any Retail has the following criteria for the Strategic Stock management Policy.

  • Retail Model: Boutique Private Label Brands with full range. Shelf life is 6 months for all products.
  • Target stock turn: 4 times per year
  • Capital: $600,000 stock funded 45% by supplier supplier terms of 30 days on invoice date and 55% by bank overdraft at 8% p.a. with 5% buffer or $30,000 being supplied by store owner
  • Orders: Monthly due to supplier terms. Staggered deliveries every Wednesday or Thursday for first 3 weeks of the month.
  • Promotions: Monthly based on individual brands and occur in last week of month.

Impact of Policy

When a staff member (i.e. new team member) reads the policy they understand ordering is monthly, so weekly orders are no an option. Second the logistics indicate extra staff would be rostered on during delivery days, Wednesday and Thursday. Further daily special orders won’t be an option.

Sample Stock Management Dashboard

An effective way of checking performance to your stock management policy is by using our dash boards.