What Is Stock Control?

Stock control, also known as inventory control, is the process of managing and regulating the levels, movement, and storage of inventory within a business. It ensures that the right amount of stock is available at the right time to meet customer demand while minimizing holding costs and preventing overstocking or stockouts. Effective stock control is vital for maintaining operational efficiency, reducing waste, and supporting customer satisfaction.

1. Objectives of Stock Control

  • Ensure Availability: Maintain sufficient stock levels to meet production or customer demand.
  • Minimize Costs: Reduce costs associated with holding, ordering, and managing inventory.
  • Prevent Losses: Avoid theft, obsolescence, and spoilage of inventory.
  • Support Accurate Accounting: Provide reliable data for financial statements and cost control.

2. Types of Stock Controlled

  • Raw Materials: Inputs used in the production process.
  • Work-in-Progress (WIP): Partially finished goods still in the production process.
  • Finished Goods: Completed products ready for sale or distribution.
  • Maintenance, Repair, and Operations (MRO) Supplies: Items used in supporting business operations.

3. Methods of Stock Control

A. Perpetual Inventory System

  • Updates stock records in real-time with each purchase or sale.
  • Helps in immediate detection of discrepancies and better tracking.

B. Periodic Inventory System

  • Stock is counted and valued at regular intervals (e.g., monthly or annually).
  • Suitable for small businesses with less frequent inventory movements.

C. Just-in-Time (JIT)

  • Stock is ordered and received only as needed to minimize holding costs.
  • Requires accurate forecasting and reliable suppliers.

D. Economic Order Quantity (EOQ)

  • Determines the most cost-effective quantity to order, balancing ordering and holding costs.

E. ABC Analysis

  • Classifies inventory into categories (A, B, C) based on value and importance for focused control.

4. Tools and Documents Used in Stock Control

  • Stock Cards / Bin Cards: Record stock movements and balances at storage locations.
  • Stores Ledger: Central record showing stock quantities and values.
  • Stocktaking Reports: Used during physical inventory counts to verify records.
  • Inventory Management Software: Automates stock control and provides real-time tracking.

5. Benefits of Stock Control

  • Improves cash flow by reducing unnecessary inventory investment.
  • Minimizes waste through better tracking and storage practices.
  • Enhances customer service by ensuring product availability.
  • Supports accurate costing and financial reporting.

Strategic Importance of Stock Control

Stock control is a cornerstone of efficient business operations. It helps businesses maintain the balance between supply and demand, reduce excess inventory costs, and respond promptly to market needs. An effective stock control system leads to better planning, reduced operational disruptions, and improved profitability.