Why Transparency In Your Stock Is So Important to Your Bottom Line

Why Transparency In Your Stock Is So Important to Your Bottom Line

Stock control and reporting – why it’s so important

Unfortunately when it comes to stock control, many businesses suffer from uncertainty, with no clear insights into current stock levels, both in terms of total quantity and location. That lack of visibility impacts decision-making, hindering efficient procurement and order fulfilment. This is where reporting is important and your system plays a big part.

With effective reporting and visibility, you can better understand what stock you need now and in the future. What’s here now and what’s coming in the future. Where stock is and how long it has been there. What’s due to leave and when. When you have this information, you can better manage and monitor wastage. It’s also imperative for tracking – this is why tracking by batch is great, especially when it comes to stock that can become obsolete.

We recommend accurate and timely reporting across a number of areas in the business process:

  • Demand forecasting: pipeline forecasting, historical sales analysis
  • Stock forecasting: current stock + pending purchase orders – forecast demand
  • Stock quantity reporting: stock quantity by location and bin where necessary
  • Stock ageing: batches or items reported by age
  • Stock valuations: stock values at the lower of cost and net realisable value


Let’s delve a little deeper into those…

Demand forecasting

Demand forecasting plays a crucial role in ensuring that businesses have the right amount of stock on hand to meet customer demand without facing excess holding costs or stockouts. It can be broken down into pipeline forecasting and historical sales analysis.

Pipeline forecasting: Pipeline forecasting involves predicting future demand based on the current sales pipeline, which includes analysing potential orders that are in the sales pipeline but have not yet been fulfilled. By understanding the sales opportunities in the pipeline, businesses can anticipate upcoming demand and adjust their stock levels accordingly. For example, if a large order is in the negotiation stage, the business can prepare to scale up production or procure additional stock to meet the expected demand.

Historical sales analysis: Historical sales analysis involves looking at past sales data to identify patterns, trends and seasonality in customer purchasing behaviour. By understanding historical sales patterns, businesses can make more informed predictions about future demand. For instance, if there is a consistent surge in demand during certain seasons or promotional periods, historical sales analysis helps businesses anticipate and plan for these fluctuations. It also aids in identifying slow-moving items or obsolete stock that may require special attention or discounting.

By getting your demand forecasting right, you can ensure that your proactive in your procurement and can optimise stock levels, to ensure you reduce wastage and can mee demand.

Stock forecasting

Stock forecasting is another critical aspect of stock control, that involves predicting future stock requirements based on the current stock levels + pending purchase orders – forecasted demand. By considering current stock levels and factoring in pending purchase orders and forecast demand, businesses can optimise their reorder points. This ensures that new stock is ordered in a timely manner, preventing stockouts and minimising excess inventory holding costs.

In essence, by considering current stock, pending purchase orders and forecast demand, businesses can strike a balance between meeting customer demand and optimising their inventory costs. This integration ensures that stock levels are aligned with market dynamics, contributing to a more responsive and efficient supply chain.

Stock quantity reporting

Stock quantity reporting, specifically focussing on stock quantity by location and bin, is a necessary element of stock control as it facilitates efficient warehouse management and order fulfilment. Let’s explore the components and integration of stock quantity reporting into the broader stock control strategy:

  1. Stock quantity by location: This involves categorising and tracking the quantity of stock available in different physical locations within a warehouse or distribution centre. By having a clear understanding of stock quantities in each location, businesses can streamline order picking processes and reduce the time it takes to fulfil customer orders.
  2. Stock quantity by bin: Bin tracking involves further subdivision of stock within a specific location. Bins can represent shelves, racks or designated storage areas within a warehouse. Tracking stock quantities by bin is particularly useful for optimising storage space and ensuring that items are easily accessible for order fulfilment.

Utilising stock quantity reports by location and bin helps in optimising the layout of the warehouse. High-demand items can be strategically placed for easy access, reducing the time and effort required for order picking and with accurate stock quantity reporting, businesses can minimise the time it takes to locate and pick items for customer orders. This efficiency is crucial for meeting customer expectations regarding quick order turnaround times, leading to improved customer satisfaction.

Stock ageing

Stock ageing, involving the reporting of batches or items based on their age, is crucial for managing inventory effectively, especially when dealing with perishable goods or items with a limited shelf life.

Stock ageing involves categorising inventory based on the time since it was received or produced. Batches or items are grouped into different age categories, allowing businesses to monitor the freshness of products, track expiration dates and minimise the risk of holding obsolete stock.

Stock ageing reports help businesses identify items or batches that are approaching their expiry dates or becoming obsolete. By addressing ageing inventory proactively, businesses can implement strategies such as promotions or discounts to clear out older stock before it becomes unsellable.

Implementing a first-in, first-out (FIFO) approach ensures that older stock is sold or used first, reducing the likelihood of waste and ensuring that customers receive the freshest products. Stock ageing reports can also inform pricing strategies, especially for items nearing the end of their shelf life. Implementing dynamic pricing or targeted promotions for older stock can help clear inventory quickly, generating revenue and minimising losses.

Not only that, but in industries with strict regulations regarding the sale of products with expiration dates, stock ageing reports ensure compliance. Businesses can accurately track and label items based on their age and reduce the risk of regulatory penalties.

Stock valuations
Stock valuation ensures that businesses accurately assess the value of their inventory. The principle of valuing stock at the lower of cost and net realisable value (NRV) is aimed at reflecting a conservative and realistic estimate of the inventory’s worth.

Stock Valuation Components:

  1. Cost of Inventory: The cost of inventory includes all expenses incurred to acquire or produce the inventory. This encompasses purchase costs, production costs and any additional costs directly attributable to bringing the inventory to its current condition and location.
  2. Net realisable value (NRV): Net realisable value is the estimated selling price of the inventory minus any direct costs of selling, such as marketing expenses or distribution costs. It represents the amount a business expects to realize from the sale of inventory after considering these selling costs.

Valuing stock at the lower of cost and net realisable value helps mitigate the risk of inventory write-downs. By incorporating a conservative estimate of inventory value, businesses reduce the likelihood of having to write down the value of inventory in the future due to market changes or shifts in demand.



Furthermore, technology can be a game-changer when it comes to stock control. Embracing the power of automation, artificial intelligence and machine learning algorithms to enhance the accuracy of your demand forecasts. These advanced technologies can analyse historical data, market trends and even external factors like economic indicators to provide more nuanced predictions.

Lastly, don’t overlook the role of customer feedback in refining your stock control strategies. Analysing customer complaints, returns and preferences can offer valuable insights. By aligning your stock levels with customer demand and preferences, you not only reduce the risk of overstocking but also enhance customer satisfaction.

How Poor Stock Control Is Costing UK
Businesses Billions Every Year
– and How You Can Avoid the Same Mistakes.

The art of effective stock control stands as a linchpin between profit and loss, customer delight and disappointment, and efficient operations and logistical chaos.

In our free white paper, we take a look at the critical importance of stock control and how inadequate management can chip away at your bottom line and hinder growth.

Stock Control Whitepaper
Contact 0800 0433 106 info@thehbpgroup.co.uk