Improper stock control can ruin your business. Be aware that we’re all prone to making costly mistakes that can spell the end for your business, Even Nike wasn’t immune. In the early 2000’s, lack of stock control led to the loss of, hold your breath, approximately $100 million in sales. That is a big loss for any company, even a company the calibre of Nike.
After all of the hullabaloo, Nike’s stock price plummeted 20%, It was slapped by several class-action lawsuits, and became the poster child for inefficient implementations. Fortunately, they were able to bounce back by using a better stock control system. If it can happen to one of the biggest companies in the world, it can happen to you too.
We’ve rounded up the top 5 Stock management mistakes businesses make and the possible solutions:
Failure To Accurately Forecast Demand
Nike’s problem, Like most stemmed from inaccurate forecast demand, Its software had bugs and errors and produced inaccurate forecast, which they used for their manufacturing plan. As a result, They did not have the products that were in demand and had too much of the products that were not selling. A perfect example of exactly what you do not want going wrong with your stock.
Stock control systems, first and foremost, must be free from bugs and data errors. Demand forecasts are critical to producing the right number of items and if the calculations are off, you’re in trouble, especially if you’re running a wholesale business. There are quick and easy ways to avoid this, Use an external Stocktaking company and outsource counting from the business. Alternatively use a cloud based stock management app to keep on top of it all yourself. However above all else a live stock system gives you maximum traceability and would help contribute to lowering shrinkage.
Lack Of Automation
If you’re still tracking inventory with Excel, or with pen and paper, then you could be losing money. Manual tracking of stock in & out takes too much time and won’t get you accurate results. You’re wasting time and valuable resources that keep you from focusing your energy on other areas that can help grow your business. There’s also the fact that manual tracking means that you’re vulnerable to human error, as well as employee pilferage. And we’re all human!
There are many case studies for companies that have increased revenue through efficient stock control. Tasks can be automated, cutting down on staff hours & thus saving money which can then be put back into the company leading to increased growth.
For companies who are using software that’s installed on local computers, issues are common because not everyone knows how to use it correctly. When there’s so much to do and only one person who’s familiar with the system, you can get left behind in orders. Lack of proper training can severely affect your ability to keep up with orders or worse, result in wrong products being sent out, which will cause both customer satisfaction and retention levels to drop.
Cloud based stock management systems are beneficial in so many ways:
- They have easier learning curves and it shouldn’t take long to train employees properly.
- Easy access for those who travel a lot and multiple employees can log in remotely at once.
- No need to have separate people process orders, check stock, or track inventory.
Inefficient System Implemented Inside The Warehouses
It’s not uncommon for warehouse managers to fail in finding more efficient ways to handle business as they are warehouse managers not business owners. Simply rearranging goods so they’re easily taken out for shipment can save you massively on your bottom line. Often times, employees take too much time looking for an item which may be misplaced or if your stock levels are incorrect may not even be there. Always remember that wasted time is money lost.
A simple solution is to figure out which items sell more and place them near the shipping area so they can easily be dispatched. Sales & demand reports should give you a good idea which items to put close to the door. Additionally, don’t randomly put stock where there’s available space just because its free. Allocate each product a specific area based on popularity so they can be easily retrieved.
In order to make sure the flow of goods is optimized and minimize bottlenecks. Efficient time management spent on counting, picking, packing and finally moving each shipment through the handling system. If you can’t figure out how to get the workflow right in order to minimize the amount of time spent here, consider investing in consultants who will be able to advise you on this.
Less Frequent Stocktakes
Many companies cease operations for a day to check inventory. This can result to profit loss. It’s worse for huge businesses that have so much inventory; they can end up profitless for weeks.
This is an outdated method and one that’s not productive at all. You’re better off scheduling more frequent regular stocktakes to keep the company from shutting down operations and missing out on sales. In addition to this, even if you do find a discrepancy during your stocktake, it will be difficult to pinpoint the problem when you have the time-frame of an entire financial year or to look back on.
There are many ways to keep on top of your stock. Operating a live stock system and performing more frequent Stocktakes will help eliminate profit losses to an extent. Using live stock and performing regular Stocktakes gives you 100% accuracy and confidence in your numbers. This may even translate into converted sales as sales reps with more visibility and clarity on stock levels will be able to communicate more confidently knowing they have the product the prospective customer wants!
Inventory management can be tedious, However using a streamlined process with the correct tools, will greatly reduce mistakes and improve operations which can lead to more sales and overall better business.