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Stock Control 101
Thursday 24th May 2018
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Stack of CDs

Stock Control Fundamentals

This was written for someone picking up responsibilities for stock control for the first time. The Sixteen (a classical choir) have about 80CD's in the catalogue at any one time. It proved so useful as a starter guide that it is worth wider circulation. By way of pre-amble, it's not necessary to do anything complex, more some fundamentals well. Complicating a mess (which is what too many companies do) gives a complex mess.

Originally drafted as a favour for a friend

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Stock Control - The Fundamentals

Transactions, in and out, are the weak spot. Inbound transactions drive supplier payments / refunds and stock on hand. Out drives invoicing, cash, receipts and stock. All are incredibly vulnerable to error &/or getting 'out-of-sync' (e.g. 'I'll send you the receipt when I get home' Now the goods and the cash are in sync, but the bookkeeping is out)

  1. Have a good process and stick with it.
  2. Getting signatures doesn't increase accuracy, good processes do. Signatures sometimes help when backtracking, although maybe the missing transaction was the one not signed for! Thieves don't sign.
  3. Realise that it will go wrong (stock moves, errors stay) and build in checks and balances which
    • Put it right before you hurt a customer or yourself
    • Unravel and fix causes, not effects
  4. Theft and forgetfulness are endemic. Tough, you shouldn't have volunteered!
  5. Play hardball. They are not CD's, they are money. If you wouldn't hand someone £1000 on a handshake, don't hand them 100CD's.
  6. You will get returns. Plan for them now.

Know what and where the stock is. In computerised systems, stock is a calculated consequence (start stock + deliveries - shipments = stock now) so is classically subject to errors anyplace else. Hold stock at cost price. Write it down (in value - don't scrap it) progressively if it becomes clear it won't all sell. Don't 'bottle' at this - it's much harder to write lots down late than little bits early. Don't worry if you write something down too far and it then sells. You made a paper profit, cancelling the paper loss you took earlier. If you do finally have to scrap stuff - destroy it. Council tips are full of entrepreneurs. Keep the re-ordering very simple. If you set the ROP (re-order point) to 'when I have 100CD's of a title left', then mark the 10th last box (if packed in 10's) in some way. When you open or issue that box, reorder. Order what you need. Don't get too drawn to volume discounts (100 cost £5 each but 500 cost £4 each) Cheap items that don't sell are bloody expensive. After the initial pressing (which inevitably involves a 'blind forecast' of what might sell) only reforecast when you are sure sales have changed substantially. There's more damage done by reforecasting than most anything I deal with. The reforecast might alter the ROP (when you reorder), the ROQ (Reorder Quantity - the amount you order), both or neither. ROP and ROQ (colloquially 'rop & rock') are your steering wheel and accelerator. ROP should be 'the amount I might sell before the ROQ arrives, plus a safety margin'.

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