Stock control
THE PURPOSE of stock control is to make sure that the right quantity/number of each type of product is always available. This is important, or else the firm might find itself out of stock, and lose sales as a result. Too high a stock level means money is tied up unproductively, and valuable space wasted.
Several steps must be followed to ensure that an accurate picture of the current stock position is always at hand; therefore, proper records must be kept for the ordering, receiving and issuing of goods. Stocktaking must be carried out at regular intervals.
RECORDING INCOMING STOCK
This may be done either centrally, through the use of a stock record card, or computer system, or locally. A local system means that a card (sometimes called a bin card) is attached to the rack where the product is stored; the date and quantity of incoming stock is recorded on the card.
After goods have been checked, the storeroom should be arranged in an orderly manner to expedite efficient handling of storeroom content.
RECORDING OUTGOING STOCK
Whenever stock is issued, the date, quantity and requisition number must be recorded on the stock record card. Keeping a running balance is important so one can know how much stock is held. The final column of the stock record card shows this.
REORDERING WHEN STOCKS RUN LOW
A well-organised storeroom has a reordering procedure that goes into effect whenever an item reaches the minimum stock level. Usually, the storeroom notifies the purchasing department, which in turn places the order with the supplier.
STOCKTAKING
This is done regularly, so as to ensure that the balances on the stock cards are accurate. The firm’s auditors may make spot checks to make sure that products are not unaccountably disappearing. Regular check detects slow-moving items and poor buying practices.
An annual stocktaking is done at the end of the financial year, which involves the assessment of the value of the goods on hand. A physical count of each item is done and its value calculated. At the end of the financial year, the totals are then added to give the closing stock figure, which appears in the final accounts.
COMPUTERISED STOCK CONTROL
The computer with a special software can also assist with stock control. The computer can record all the items available for sale, and then deduct each item that is sold from the total stock. Some retailers use what is called barcoding for printing receipts. This makes it easier for the establishment to keep a tab on their stocks, as the computer will show when it’s time for reordering. Here is an example: when you go to a large bookshop to purchase a textbook, the item is passed over a scanner (the section with the barcode facing the scanner); the computer reads the description and price of the item and automatically deducts the total from the stock figure.
STOCK LEVELS
■ Minimum level
■ Maximum level
MINIMUM LEVEL
The minimum stock level is the point at which there is just enough stock to take care of the normal demand until the new stock is delivered. The storeroom supervisor establishes the minimum levels for all items.
The minimum stock level is determined by:
■ The delivery period.
■ Amount and frequency with which an item is used.
Can you say what the storeroom clerk does on noticing that the minimum stock level is approaching? A minimum stock level for each item is fixed at a level, which allows for the item to be reordered before it runs out.
MAXIMUM LEVEL
The maximum stock figure is the largest quantity of stock. The purchasing staff should be able to decide upon the amount of goods to be ordered. However, if the stocks are too high for the needs of the firm, then the rate of turnover would be lowered and the profits reduced. Of course, if stocks are perishable they will deteriorate.
This is all for this week, continue to revise.