6 tips for optimum stock management

By Nathalie Pouillard

Published: 16 November 2024

Stock management is strategic for any company in industry or commerce.

It involves organising your logistics flow in a way that, if well thought through, can generate significant savings and a very attractive return on investment.

But it goes far beyond the financial aspect: by optimally managing your stocks and supplies, customer satisfaction is positively impacted.

Discover 6 tips for improving stock management, in shop or in the warehouse.

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What is stock management?

Stock management is :

controlling the incoming and outgoing flow of goods,
to guarantee the immediate availability of a product when an order is placed and to meet demand,
without this being too costly for the company and avoiding as much waste and loss as possible.

The concept of stock can refer to several types of goods:

raw materials or intermediate products, for production industries ;
finished products intended for sale by a retail or e-commerce company.

What are the risks of poor stock management?

Companies that do not pay sufficient attention to stock management risk :

poor order management
increased labour requirements
delays in preparation and delivery times,
poorly organised warehouse space
sub-optimal use of equipment,
accidents in the workplace,
loss, spoilage and breakage of goods.

They also run the risk of seeing their competitiveness on the market decline, to the benefit of better organised shops or warehouses. The challenge here is to strike a balance between overstocking and understocking by calculating the safety stock.

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Clear, simple steps to boost productivity,
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and advice from a major player in online logistics management.

The risks of overstocking

It may seem like a good idea to plan "broadly" to offset any risk of shortages, but overstocking has its share of disadvantages:

it requires larger, and therefore more expensive, storage areas;
because of the quantity to be stored and managed, other additional costs are to be expected in terms of organisation (time spent searching for products, labelling, preparing orders, etc.);
lastly, there is a risk of stock obsolescence and goods not being sold out: one product may be replaced by another, leaving the oldest on the company's hands.

The risks associated with understocking

Like all extremes, under-stocking is not beneficial either:

if the manufacture of a product depends on the availability of a part, and that part is not in stock, the whole production chain is interrupted ;
and if the item is not available in shop, it's a missed sale, and customer satisfaction, or even loyalty, is at stake.

Here are six tips to follow to ensure that your company optimises its warehousing and stock management procedures.

6 tips to improve stock management

These tips concern both warehouses and in-store stock management.

1 - Organise the warehouse or storage area

Make sure that your warehouse is organised in a systematic and orderly way so that :

items are easily identified for customer orders ;
materials bound for the warehouse are received and stored efficiently.

The aim is to save time and reduce the costs associated with lost productivity.

☝️ One of the techniques for organising a warehouse is slotting, which consists of determining and adjusting the optimum location of goods in the storage space, to increase the productivity of processes such as :

receiving
replenishment
order preparation.

2 - Establish good stock naming and labelling practices

Labelling stock

Stock labelling goes hand in hand with its organisation: in a large, well-organised warehouse, staff will easily find the right section, while on a smaller scale, a well-labelled shop will make it easier to find the right item on the shelf.

Proper labelling of merchandise ensures that

ensure that each item is clearly identified ;
to provide key information on all its specific features (expiry date, presence of hazardous materials, packaging requirements, etc.).

☝️ When it comes to the documents that accompany the goods, the supplier who sends the product to the warehouse must also follow good inventory practices.

Ideally, the supplier will send items using the same labelling as the delivery warehouses, either by coordinating references or using UPC or UCC codes. This will make inventory work much easier.

Inventory naming

As well as clear labelling, the naming convention used to identify an item on labels is equally important, not just on labels but throughout the inventory system.

Unique item identification is obviously very important here. However, as well as being unique, its length and clarity must also be taken into consideration.

Ideally, item names should be clear and sufficiently well thought out beforehand so that they also have a descriptive function.

The string of characters and/or numbers used for the item number (in a well-organised naming system) will have meaning, with each character or set of characters identifying a specific category in your stock organisation system.

Secondly, names can be useful when searching for an item during inventory, order fulfilment, or other warehouse-specific tasks, or when filtering or searching for reports.

3 - Define and document replenishment methods

The "calendar method" of replenishment

This is the simplest and least customised method. It involves ordering a fixed quantity on a fixed date. It is therefore suitable for inventory and order management with little fluctuation.

The order point management method

The order is placed on a variable date, when a certain stock level is reached. The quantity ordered is fixed or variable depending on the supply strategy.

This is known as Demand Driven MRP or pull flow, when supplies are triggered on the basis of stock consumption by actual orders, to avoid stock-outs or overstocking of goods whose consumption may be irregular.

☝️ The application of this method is facilitated by the use of appropriate, intelligent software, such as b2wise. This supply chain planning tool, developed around the DDMRP method, enables you to synchronise your supply chain with actual market demand. As a result, you can identify the ideal stock level to trigger your replenishment. No more extra costs linked to overstocking or stock-outs!

How do you calculate the reorder point or reorder level? A little reading ⤵️

The replenishment method

This is the opposite method, where the date is fixed but the quantity is variable, depending on the number of sales.

This method is best suited to products that are consumed regularly but are expensive, perishable or bulky.

The replenishment-to-order method

For variable stock management, subject to seasonality for example, this method consists of replenishing stocks by a variable quantity, at a variable date, according to demand.

☝️ The warehouse will perform better if its policies and procedures are well documented. All process documentation must include procedures for :

physical interaction
material handling
safety instructions
quality of reports.

Instructions should also include how to deal with damaged stock: can it be salvaged or should it be scrapped?

4 - Use cycle counting

Although most companies have processes in place to better manage inventory, this does not eliminate the need for cycle counting.

Cycle counting is a method of taking inventory of small subsets of stock over a long period of time. This procedure is different from traditional physical stock counting, where operations are suspended while all the items in the shop are counted. It is therefore less disruptive to day-to-day operations.

It also provides an ongoing assessment of stock accuracy and process execution, and can be adapted to focus on items of higher value, with the highest volume of movements, or that are critical to operational processes.

5 - Limiting and monitoring access to stocks

A simple safeguard for good stock management is to ensure that the employees who need the figures from the inventories are the only ones who have access to the stocks and the data relating to them.

Because if you know exactly who has access, and you can ensure that this small group of employees is properly trained in your company's inventory system and organisational procedures, then it's much easier for them to keep track of your inventory.If you know exactly who has access and you can ensure that this small group of employees is properly trained in your company's inventory system and organisational procedures, then it's much easier to manage the system, reduce errors and implement changes when necessary.

6 - Use software for stock management

These days, technology plays a role in almost every operational process. And if your company is still tracking stock with Excel, you're missing out on a much simpler, smoother and more automated way of managing not only stock, but also orders, sales and deliveries.

Download our free delivery note template in Excel format:

The question to ask yourself:

Do you need a simple system that tracks stock levels and movements?
Or a more complex stock management system that tracks inventory in real time?

Barcode technology plays an important role in any warehouse with an automated system.

Barcode printers and scanners are relatively inexpensive and can be incorporated into warehouse operations.

These significantly reduce manual data entry errors that occur in the warehouse or shop.

💡 Sof tware example:

👉 VSEs operating in B2B will appreciate Erplain, the complete B2B inventory and sales management software. With this platform, you centralise and automate all your stock management, both from a strategic point of view (setting the replenishment threshold, reports, synchronisation with QuickBooks, Shopify and Pennylane, etc.) and at operational level (management of multiple warehouses, product traceability, barcode integration, etc.). The result: precious time saved, data updated in real time and optimised processes to avoid overstocking, out-of-stocks or stock errors.

👉SMEs, ETIs and key accounts appreciate the GSE-Web stock management solution for its ease of use and its rich functionality. Among other things, the tool lets you manage movement orders, reserve products and track spare parts and perishable products, and complies with Good Manufacturing Practice through its batch management functionality.

Bonus : the solution can be used wherever you are, on PC, tablet or smartphone!

👉 For large-scale warehouses, a tool like Generix WMS, a Warehouse Management System, can be used to rationalise storage space (with slotting in particular) but also to automate flows and promote communication between all the players in the supply chain with specific collaborative portals (supplier, carrier, customer portal).