Summary
• Large quantities of stock tie up money.
• Stock management systems provide a clearer picture of stock.
• They also highlight trends.
• Good stock control can improve customer service.
Over the past couple of years, as the economic climate has changed, timber and builders merchants have adjusted their attitude towards their stock holding.
Money used to be easy and cheap – whether it came from finance, currency exchange or customer orders. What was the point of putting time, effort and expense into stock control? It was simpler to carry plenty of stock, so when a customer asked, “Have you got?” the answer was probably “yes”. Now, as credit lines are being squeezed and customers try taking a little longer to pay, tying up money in stock makes little sense.
As a company that sells specialised timber applications we have seen a definite shift in the reasons why companies implement a new software system. Previously, faster sales, better customer information and improved reporting were the drivers of change – now the focus is on understanding stock. This means knowing exactly what you have, clearing out stocks that aren’t working hard enough, and employing a just-in-time policy to minimise investment of working capital.
As those who record their stock on a computer will testify, it is a balance of effort versus detail: the more accurately you record your receipts and despatches, the better the information at your fingertips. Now there are several advances that are helping to shift that balance – making it easier to manage stock.
Hand-held computers have been around for a number of years, and they are getting cheaper and easier to use all the time. All-in-one devices that have a computer, bar code scanner and bar code label printer, make receiving and labelling stock a simpler process.
RFiD (Radio Frequency Identification) also has the potential to improve stock control. Already employed in applications ranging from tracking airport luggage to beer barrels, RFiD uses small tags attached to a product that can be read by waving a hand-held reader nearby. Alternatively, tags can be read as products pass through a gantry. Imagine the scenario where a builder drives into your yard, loads the goods he needs into his van, and then drives out. As he passes through the exit gantry his account card in his pocket is read, all the products in the van are identified, an order added to your system and a ticket printed. Maybe it’s a bit far-fetched at the moment, and certainly an idea that needs some reflection, but it’s one way that future stock systems might evolve.
Back to surviving the here and now – does better stock control really put money in your pocket? Leaving aside the benefits of improved customer service by knowing instantly what you have, and what is on order, good stock control reduces stock turn days.
What starts out sounding like a statistical exercise, designed to show off the quality of pie chart your reporting system can generate, could actually put money back into your business, making it leaner and lighter on its feet. Once you know what you have in stock, it becomes easier to see what is moving well and what might need a helping hand. Reordering can become tighter, sourcing from better suppliers with more accurate delivery times. A computer needn’t do the reordering for you, but should provide detailed information; highlighting trends and making suggestions simplifies the job.
These improvements help to minimise the amount of working capital tied up in the business. If that is borrowed money you save on interest payments. Alternatively, if the money is your own, it can earn you interest, or be put to other uses. Either way you are significantly reducing the commitment and risk to the business during turbulent times.
