Implement a Stock System Now
The idea of implementing a new stock management system can be really daunting. It can mean huge internal process change, not to mention incredibly time consuming to manage and can be quite costly to implement. However not having a good system in place can cost you far more in the long run, particularly in times of economic down turn like we’re currently seeing.
I can’t tell you the number of times I’ve visited new clients and been told that they don’t know exactly how much stock they have on hand and to make matters worse, a significant amount of time has lapsed between stocktakes (I’m talking years!) it has just been accumulating over time and now they have a warehouse full of the stuff. Was it the right mix of stock? Who knows! Was there a stack of cash sitting around on shelves helping no one’s cause? Absolutely!
This is fine when times are good. High sales growth and healthy bank balances mask the amount of cash that is being pumped into the wrong stock. But when things slow down and cash collections decrease, these weaknesses in historical purchasing habits are exposed, leaving the business vulnerable and it’s owners in unchartered waters.
There is no time like the present to get your house in order, tidy up your processes and get good systems in place. The benefits are countless, but for the sceptics out there here are the 4 main reasons why you should implement a good stock system:
Cash - Purchasing stock requires a significant cash investment. Like any investment, it should be based on an informed decision. The right decision will mean that you order the right amount of the right stock which moves quickly, generating cash and profit for the business. The wrong stock could mean that cash is tied up for some time, exposing the business to cash flow difficulties, as well as reducing opportunities to use the cash for other profit generating activities. A stock system will give you information to make an informed decision on how your cash is invested.
Improved customer experience - How many times have you made an online purchase only to have you order cancelled because of insufficient stock? As a customer it’s frustrating and may influence your decision to purchase from this store again. As the business it’s embarrassing and can have a negative impact on your reputation and brand if your perceived as being unreliable. A good stock system and process will stop this from happening as your stock is accurately calculated in real time.
Purchasing controls - With no visibility of historical demand or safety stock requirements, how do you know what stock to order and when to do so? A system will allow you to set reorder points based on sales demand, accounting for lead times and possible disruption from the supplier. This means that you can order the right amount of stock at the right time, so you never run out of you best selling items, and hold minimal amounts of slow moving items.
Measurement of stock performance - Do you know how often stock is turning? If you buy a box of parts today, how long until they’re sold? Without a stock system it’s very difficult to know if items are moving really slowly or performing way better than expected. A stock system will allow you to measure stock performance to make performed decision of items/ranges to focus on and further promote or items that are underperforming, where perhaps it’s not viable to persevere.
If you own a business and don’t have a stock system, I highly recommend you start look into implementing one. The pro’s listed above speak for themselves. It doesn’t have to be a fancy platform. There are some great cloud based systems that are cost effective and integrate with most accounting systems. If you’d like a better understanding of the option available to you, touch base at info@brambleandbriar.com.au.