Stock Control. All You Need To Know About it | Herbst Software Herbst Software

All you need to know about Stock Control

What is stock control?

Stock control, also known as inventory management, is a series of procedures intended to manage the flow of goods through retail environments. Digital inventory systems now make up the bulk of stock control devices, but some small businesses still use pen and paper ledgers.

You can click here to read more about the Top 5 Benefits To Maintaining Good Stock Control


Why Stock Control Matters?

Having too much of an item, particularly one with a limited shelf life can harm profits almost as much as not having an item in stock when a customer walks through the door intending to buy. Stock control systems and procedures are designed to optimize the amount of inventory on hand to maximize sales and customer satisfaction. The reason these systems matter is because customers who arrive at the store hoping to purchase an item that is out of stock ultimately leave frustrated, and might never return. As any sales representative might tell you, repeat business is the key to success in a brick-and-mortar operation, so ensuring that the business can meet the customer’s expectations is of the utmost importance.


What’s the purpose of stock control?

The key purpose of stock control is to minimise excess stock and controlling the cost of stock handling, while ensuring that firms have sufficient stocks to meet consumers demand. The proposition sounds simple but it is much more complicated since there is always fluctuation in demand of goods and some of which may not be predictable.

The main reason for holding stocks of work-in-progress is to allow greater flexibility in the utilisation of machinery, while holding finished goods in stock allows for variations in consumer demand patterns. The demand for certain products, for example, is influenced by the weather. A sudden cold or hot spell can affect demand patterns significantly and producers may suddenly find themselves running out of stocks completely or alternatively, having excess stocks and facing the problems associated with storage and storage costs.

Holding of stock has a lot more to do but firms must follow a procedure in order to avoid unnecessary mistakes;

  • Ensure that stock rotation takes place efficiently. Most of the materials/ products have a shelf life. Firms must make sure that this date is not exceeded. The best way to do this is stalking and recording the products in a way that the oldest material/ product is used first. This is known as FIFO in other way First In, First Out.
  • Ensure that wastage is minimised. Stock needs to be looked after. It must not be stacked too high and it also must be handled carefully. Wastage will also include theft, so security must be sufficient, especially for valuable materials.


Let’s find out which are the direct cost related to holding cost;

  • Warehousing fees– which includes security charges, rent and insurance
  • Losses- related to theft or damage
  • Obsolescence- where ‘dead stock’ created by fashion change
  • Administration and Taxes- e.g. labour costs of processing orders and the inspection and return of poor quality products
  • Interest on the loans taken out to create the inventory in the first place

One of the primary significant reasons for business disappointment is poor income. Stock is a liquidity issue, since stock speaks to tied-up capital, which can’t be discharged until crude materials are transformed into completed products and afterward sold. Having cash tied up in stock isn’t only the expense of tying up liquidity, yet additionally the open door cost of cash that could be sent somewhere else, for example, putting resources into greater limit.


Let’s find out the cost related to inadequate stock levels

While there can be significant costs involved in holding high stock levels, there are also significant risks and associated costs, of holding low levels of stock, which may result in a stock-out situation. This situation could have some of the following consequences:

  • Inability to satisfy unexpected large orders and lost sales – when faced with a large order the firm may choose to meet this and let existing smaller customers down, or alternatively refuse the new large order, which may have future costs as well, if that business places orders with competitors who can meet their demand.
  • Loss of goodwill – as a result of failing to meet customer orders, the word may get out that the business is unreliable.
  • Uneconomic purchasing orders – small production runs may mean that the firm buys raw materials in relatively small quantities; possibly losing out on bulk discounts.
  • Longer delivery lead times – in a world of instant gratification and customer experience with online suppliers such as, expectations of quick delivery times are increasing. Firms which can promise delivery, say within 24 hours, may win an order over those businesses that have longer delivery times.
  • Risk of production shut-down – if a firm holds low volumes of raw materials, any delivery failure by suppliers my result in a loss of production.


What is stock control system?

Stock Control System also known as Inventory Control System, incorporates all the functions that are related to management and maintenance of the inventory. A good stock control system takes care of everything, from purchasing, product tracking, and product turnover, to storage inputs, shipping and receiving, and re-ordering the products. There are four different types of stock control system:

  1. Perpetual Inventory System
  2. Periodic Inventory System
  3. Barcode Inventory Systems
  4. Radio Frequency Identification (RFID) Inventory Systems

If you are in the Food & Drinks industry, you might like this article as well -> Our Software For Food & Drink Companies Will Set You Free From All The Hassle!


How is it different from it’s Manual counterpart?

An automated stock control system is much more reliable as compared to a person who uses a pen and paper to maintain stock numbers. An automated control system helps in maintaining accuracy and increases efficiency and productivity thereby decreasing the use of financial resources. Adopting this system will not only make the quantitative product analysis easier but also provide you with future projections related to the inventory. Other benefits of a stock control system are: 

  • Accurate recording of Data
  • Projecting inventory needs
  • Maintaining the variation in stocks
  • Updating as and when new stocks arrive
  • Sales Information
  • Customer History
  • Integrated financial data keeping
  • Real time information 
  • Database connectivity with the mainframe
  • Live information on data recording, storage and connectivity
  • Vendor management and agreement handling
  • Report Generation
  • Automatic stock order placements for the products which were high in demand


All of these remarkable benefits make a stock control system more powerful when compared to a manual system. Also read, (How does stock control influence your business growth?)


Why Herbst Stock Control System?

Herbst Software is known to offer a powerful fully integrated stock management system, built to deal with a wide range and high volume of stock operations. This solution gives you the ability to manage your product life cycle and optimise inventory operations across the organisation, then linking this information in real-time directly with all of the other software features and business processes.

The purpose of this solution is to completely automate your stock control procedures with 100% accuracy.  With the sales and purchases ledgers being fully integrated, stock levels are easily maintained and tracked as this data connects directly with the stock levels. Additionally, this solution gives you real time insight into the current stock levels and allows for actionable information you can use to keep your business running efficiently at all times. Our touch screen kiosk software is also available to use in warehouses to facilitate real-time management of stock.


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