Stock control methods
/How to Control Inventory Levels
Stock control is the practice of balancing the need to maintain inventory levels against its cost. The ideal outcome of stock control is a minimal investment in inventory, while still being able to fulfill customer orders in a timely manner. Counterbalancing these two goals can be something of an art form. More specifically, stock control can involve the following activities. There is no perfect state that can be attained in the stock control area. Instead, the planning staff is always balancing the demands of different parts of the business to attain a reasonably optimal solution - which may change the next day.
Use Just-in-Time
Using a just-in-time production system that only builds goods when there is specific demand for them. This action pleases those in favor of minimizing the inventory investment, and may speed up delivery times.
Reduce Product Offerings
Reducing the number of products offered. This reduces the total amount of inventory investment, but gains the ire of the marketing staff, which wants to offer the broadest possible range of products to customers.
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Expand Warehouse Locations
Setting up warehouses near large customer concentrations, so that goods can be more rapidly shipped to them. This approach is targeted at greater customer service, but can require an increased inventory investment.
Minimize Purchases
Ordering the minimum amount of raw materials needed for specific production runs and reordering more frequently, in order to reduce the investment in raw materials.
Use Production Cells
Creating cells in the production area, which are responsible for creating goods or sub-assemblies from start to finish. Doing so reduces the investment in work-in-process , while still delivering goods in a timely manner.
Automate Picking
Installing automated picking systems, so that goods can be shipped from warehouses more rapidly.
Use Adjacent Suppliers
Locating suppliers near the company's production facility, so that delivery lead times can be reduced. Doing so reduces the need to maintain expensive safety stocks in-house.
Use Inventory Tracking
Installing a computerized inventory tracking system, so that no inventory is lost in the warehouse, in the production area, or in transit. Doing so allows a business to invest in a reduced amount of inventory.
Manage the Bottleneck
Management of the bottleneck operation in the production area. Doing so maximizes the production of key goods that are needed to increase overall company profitability .
