Stock Control: What Is and How to Manage It

One of the key factors directly influencing business competitiveness is the implementation of efficient and cost-optimised processes. Within this framework, inventory management—particularly stock control—plays a critical role in achieving these goals, as it directly impacts how customers perceive your business.

Consider, for instance, the disappointment of a buyer who has to wait weeks because the product they ordered online is out of stock. Or imagine a customer entering a store determined to make a purchase, only to leave empty-handed and frustrated because the item was unavailable.

These scenarios often arise from poor stock control, which not only tarnishes the customer’s perception of the business but also leads to negative financial implications. For these reasons, stock control stands out as an essential component of business management.

What Is Stock Control?

Let’s start with the basics: what exactly is stock control? Also known as inventory control, it is the process of managing, monitoring, and verifying the stock held by your business. The primary goal of stock control is to ensure that, at all times, the business can meet customer demand by delivering products promptly and living up to expectations.

However, achieving an effective balance between outgoing stock (sales) and incoming stock (supplier orders) is no simple task. Sales are, to a large extent, unpredictable and directly influenced by consumer behaviour. Meanwhile, managing supplier orders—though under your control—requires careful regulation of order frequency and volume to avoid both shortages and overstocking.

Why Is Inventory Control Important?

Efficient inventory management is crucial to achieving both financial and operational efficiency for any business. Effective stock control isn’t just about knowing how many products are in the warehouse but also understanding how inventory levels will evolve in the future and how they impact various aspects of the business.

Here are the key reasons why you should implement strict stock control:

• Optimising inventories: Detailed stock management helps identify which products turn over quickly and which move more slowly, enabling you to adjust inventory levels to avoid overstocking or stockouts.
• Reducing losses and costs: It prevents lost sales due to a lack of inventory and reduces costs associated with storing excess products.
• Improving planning and forecasting: Accurate demand data allows for better projections, enhanced forecast accuracy, and informed planning of promotions while anticipating seasonal changes—contributing to smarter business management and more effective category management.
• Enhancing operational efficiency: Efficient stock control ensures better resource management and optimal use of warehouse space. Operational efficiency translates to time and labour savings.
• Enhancing the customer experience: Maintaining consistent product availability improves customer satisfaction and avoids frustrating situations like out-of-stock items.

Managing Inventory Losses

Efficient stock control requires strategies and processes that minimise errors, optimise resources, and ensure product availability. Below, we outline key aspects of effective inventory management to prevent losses.

What Are Inventory Losses?

Inventory losses represent the discrepancy between the theoretical stock recorded and the actual stock available. These discrepancies may be caused by theft, administrative errors, damage, expiration, or logistical issues. Understanding the root causes is essential for implementing corrective measures.

Where Can Stock Be Lost?

Inventory can be lost at various stages:

• Storage: Due to theft, deterioration, or misplacement.
• Transport: Losses during distribution caused by damage, misrouting, or theft.
• Sales Points: Through shoplifting or billing system errors.

Identifying these critical areas helps prevent recurring losses.

Where and How to Search for Lost Stock?

To locate missing inventory, consider the following steps:

1. Review records: Analyse discrepancies between system data and physical counts.
2. Audit locations: Inspect warehouses, shelving, and receiving areas.
3. Monitor logistics processes: Verify transportation routes and associated documentation.
4. Utilise technology: Tools like RFID or barcodes can track products in real time.

What Are Periodic Counts, and How Should They Be Conducted?

Periodic counts, also known as cycle counts, involve regularly reviewing physical stock to compare it with recorded figures.

Here are the key steps:

1. Define frequencies: Schedule counts based on product turnover (daily, weekly, monthly).
2. Select areas: Plan which zones or categories to check.
3. Automate processes: Use technology, such as scanners, to record results accurately.
4. Analyse results: Identify inconsistencies and correct system errors.

In addition to periodic counts, zero-point counts are a simple yet effective method. This involves counting stock when the system shows zero units in storage. At this point, a quick review highlights any discrepancies with ease.

What Are Inventory Accuracy Indexes?

The accuracy index measures the alignment between recorded and actual inventory, reflecting the efficiency of stock management. A basic formula is:

Inventory Accuracy = (Actual Stock / Recorded Stock) × 100

A high accuracy index indicates effective stock control, whereas low values highlight errors requiring immediate attention.

Technology for Stock Control

Inventory control tools have traditionally focused on improving the visibility of products in storage. However, it is increasingly necessary to implement software solutions that enable quick and reliable demand forecasting.

Some of the most commonly used technologies for stock control include:

Management and Planning Systems

Enterprise Resource Planning (ERP)

A standard ERP (Enterprise Resource Planning) system centralises and automates inventory management by integrating with other key areas of the business, such as sales, procurement, and logistics.

Contributions to stock control:

• Real-time visibility: Monitors inventory levels and movements from any location.
• Limited automated planning: Facilitates restocking through reorder points but does not allow for demand forecasting.
• Process integration: Coordinates all purchasing and warehousing transactions to avoid surpluses or shortages.
• Error reduction: Eliminates manual records, improving accuracy.

Spreadsheets (Excel)

While a very basic method, it remains widely used.

• Basic tracking and recording: Enables manual or semi-automated inventory management with lists of inputs, outputs, and current stock levels.
• Simple formulas and automation: Uses functions like SUM, VLOOKUP, and pivot tables to analyse data and calculate restocking needs.
• Accessibility: Cost-effective and widely known, ideal for small businesses with limited inventories.
• Customisation: Users can design their own formats and reports to suit specific needs.

It is worth noting that while these solutions address specific aspects of inventory management, achieving full supply chain planning requires an end-to-end supply chain technology such as Slim4.

Stock Control Systems: Identification and Tracking

Ensuring that everything in your warehouse or store aligns perfectly—meaning your physical stock matches the records in your systems—can be made easier with the help of various technologies:

Warehouse Management Systems (WMS)

A Warehouse Management System (WMS) streamlines stock control by automating and enhancing operational processes within the warehouse.

Contributions to Stock Control:

• Real-time accurate management: Tracks stock entries, exits, and movements with precision.
• Space optimisation: Recommends strategic storage locations based on turnover and product characteristics.
• Process automation: Speeds up tasks such as picking, packing, and restocking.
• Error reduction: Improves accuracy through the use of RFID, scanners, or mobile devices.
• Comprehensive traceability: Tracks products from receipt to dispatch.

Typically, the WMS integrates with the ERP system daily to reconcile any numerical discrepancies between the two systems, ensuring stock alignment by the end of each day.

Radio-Frequency Identification (RFID)

RFID technology employs electronic tags that emit radio signals to automatically identify and track products within a warehouse. These tags can be scanned in bulk, speeding up inventory audits and minimising manual errors. Key applications include:

• Quick inventory audits or counts.
• Real-time goods tracking.
• Reducing losses due to errors or theft.

Barcodes and Scanners

While a more traditional technology, barcodes remain a fundamental tool for most businesses. They are used to identify products and record movements within the system. Compared to RFID, barcodes offer advantages such as being more cost-effective and easier to implement.

Conclusion

Stock control is not just about maintaining a balanced inventory, it is also about ensuring accuracy and traceability to prevent losses. Identifying the causes of discrepancies, adopting technologies like RFID or WMS, and conducting regular stock counts are key practices for optimising management.

Additionally, metrics such as the fidelity index can help measure and improve system efficiency. Taking a proactive and meticulous approach ensures not only product availability but also more profitable operations that align with customer expectations. This ultimately positions inventory as a strategic asset for business success.

Tools for stock control

In this context, the right tools, such as Slim4, are essential to take stock control to the next level. This type of software not only reduces inventories and obsolescence risks, but also improves coordination between processes, anticipates crises and optimises customer service. Implementing technology solutions such as these facilitates early detection of problems, offering the opportunity to resolve them before they have a significant impact.