Why Stock Control is the Bedrock Process to Production & Profitability

Stock control is critical to profitability. Period. But, that does not warrant you overstock and choke the breath out of your working capital. Nor should you leave your warehouses run dry and end up empty for stocks when market demand spikes.

Stock control is like a tightrope walk. You have to strike a fine balance to meet the optimum stock levels so that production runs smooth without any hassles. Especially in this era of booming eCommerce selling, the need for stock control is extremely important.

Here are some factors you can chew over to reason why stock control is critical to production business:

Global Competition

You are no longer sharing space with your neighborhood store. The whole global economy is at cut-throat competition. On top of that, retail giants like Amazon, eBay, Alibaba, etc. are eating into the market pie of small scale retailers.

The only edge that you can possibly achieve is through prompt service and delivery. That calls for stock availability at all times. If you run out of stock and fail to service your customer just once, they will easily swap loyalty to another global brand.

Shrinking Delivery Spans

From almost a week to few days and finally down to same day delivery, the average delivery span in the eCommerce industry has been steadily declining. Rapid delivery spans increase inventory turnover drastically. Also, they put pressure on the production systems to manufacture more quantities thus welling up the demand for inventory.

This calls for improved forecasting of annual stock demand and inventory control. You need to have a pulse on the exact (or at least) tentative amount of inventory required to meet the usual demand and also safety stock requirements at constantly reducing delivery spans. Losing track of inventory levels will not help order fulfillment at quick pace and can eventually spell doom for your business.

Growth of Drop Shipping

Successful drop shipping is heavily reliant on the minute details.

  • How much stock does your supplier have?

  • Technical specifications

  • Are all the SKUs active and available?

  • Are stocks available in the location from where dispatch is desired?

  • Is logistics from the selected dispatch location economical?

These questions and their answers depend how effectively you can taste success in drop shipping.

However, the downside of dropshipping is that, you cannot control or know the level of stock available with the supplier. Stock control in a drop shipping environment mandatorily requires a cloud-based inventory management system.

Technological Obsolescence

Technology and customer tastes share a common trait. They change at will. The trend of today will be outdated tomorrow. Similarly, the technology of today will no longer serve to meet renewed customer preferences in the near future.

The point worth noting is, you have to make calculative investments in stock. Hoarding stock in bulk quantities without a vision for the future can lead to severe working capital bottlenecks.

Hence, the need for stock control. Stocks have to be purchased only for the immediate order processes as well as for safety stock requirements. Anything more can cause financial losses.

In a Nutshell

At the crux of all manufacturing mayhem sits inventory. Ample supply of inventory is what keeps a production process progress with clockwork precision. Even the slightest shortage of inventory can bring the manufacturing process to a standstill.

Factors like global competition pressure, shrinking delivery spans and dynamic customer preferences are the factors which makes stock control an essential part of the production process.


Add a Comment

Your email address will not be published. Required fields are marked *