What is Stock Management? Detailed UK Guide

stock management
Image by tirachardz on Freepik

With efficient stock management, you can always offer the appropriate things in the right quantities to the clients who want them. This entails carrying the appropriate amount of stock in order to save costs, increase sales, and hence increase profits.

Getting your stock management correctly takes careful management of your end-to-end operations and has an impact on your supply chain, both backwards to suppliers and forwards to customers. In this guide, you will learn all about stock management and why it is essential for your success.

What is Stock Management?

The first step towards successful stock management is precisely tracking inventory amount and availability. This can be accomplished manually or with the use of a software solution, such as an inventory management system. An inventory management system enables ecommerce enterprises to track product information, view stock levels, and establish reorder points automatically. This ensures that things are always in stock and that customers can buy what they need when they need it.

After tracking stock levels, ecommerce businesses should establish reorder points. The reorder point is the moment at which an item must be restocked. Setting reorder points guarantees that things are never out of stock and that customers can always buy. Manually or with the assistance of an inventory management system, reorder points can be established.

Ecommerce enterprises should estimate demand for their products in addition to tracking stock and setting reorder points. Forecasting demand enables organisations to anticipate and plan for client needs. It can also assist firms in managing stock levels and avoiding overstocking or understocking. By giving previous sales data and projecting future sales trends, an inventory management system can assist in forecasting demand.

Ecommerce companies must also handle restocking. This includes making certain that products are supplied in a timely way and that stock levels are kept current. An inventory management system can assist with this by creating purchase orders automatically and offering visibility into inventory levels. This ensures that things are always in stock and that customers can buy what they need when they need it.

What is the Purpose of Stock Control?

The most obvious reason for stock control is to meet client demand without running out of stock or incurring delivery delays. This may need to account for seasonal variations, peak demand, or other unforeseen situations that may interrupt the supply chain and negatively influence customer service.

Another goal of stock control is to keep the costs of holding or storing stock as low as possible, so you don’t spend money or space storing stock you don’t need.

Main Approaches to Stock Management

There are two ways to stock management for small businesses: periodic and permanent stocktaking. Let’s have a look at them both:

  • Periodic stock management: This inventory valuation system necessitates physical inventory records at regular periods. This strategy is ideal for small firms with limited inventory and is far less expensive than electronic tracking systems. However, because physical stock takes are time-consuming, it is not ideal for large enterprises with substantial inventories.
  • Perpetual stock management: This approach relies on electronic tracking and POS systems to continuously record and track inventories. While more expensive than physical inventory counts, this technology provides a more precise and up-to-date indication of stock levels and eliminates the danger of human error.

Why Is Stock Management Important?

The benefits of stock management are numerous, and some of them are as follows:

#1. Increases liquidity and cashflow

Poor stock management might lead to liquidity concerns for your company.Good stock control enhances a company’s cash flow and allows you to release cash when you need it. Knowing what stock your company has allows you to easily determine the value of the stock as well as the value of your company.

#2. Improved decision-making

You can better serve your customers if you have superior visibility over your stock. Good stock management also allows you to make better business decisions, be more efficient, and run your business more profitably. This, in turn, can help your company expand and scale.

Stock control allows you to observe which stocks move quickly and hence need to be ordered more regularly, and which don’t, so you don’t waste money holding stock that doesn’t sell well. As a result, you may make smarter decisions to better serve your clients, as well as be more nimble in delivering your products and providing customer service.

#3. Improved warehouse management

A good stock control system will also allow you to be more organised in terms of storage. You may better manage your stock and available space by structuring your warehouse around the movement of your stock. Keeping the best-selling or most-used products together in the warehouse makes it much easier and faster to find them.

#4. Keep a record of waste.

Stock management is also vital for keeping track of wastage, loss, and theft, making it more difficult to misplace stock. Furthermore, when a warehouse is well-organized, it becomes a far more effective deterrent to theft, increasing the likelihood of theft reduction.

#5. Supports selling on multiple platforms

If you sell, supply, or distribute products across various platforms, good stock control is essential to avoid running out of inventory. It also simplifies what would otherwise be a difficult operation to complete precisely manually. A strong stock management system can also make it much easier to process returns and refunds if they are required.

#6. Promotes company expansion

Finally, if you want to expand your firm or add additional product lines, a strong stock management system will make it easier to manage expansion.

How Can You Manage Your Stock Effectively?

How can you manage your stock properly if you are aware of its importance? We’ve got some excellent suggestions for you right here!

#1. Establish Minimum Stock Levels

The first and most critical step is to establish a “minimum inventory level” for all of your commodities. That is the bare minimum that must always be on hand, so when it falls below the predetermined amount, you know it’s time to place an order for more! The minimum inventory range for various goods can vary depending on the sector and the demand for your items. Before establishing the right stable threshold, you should undertake a study and determine what amount is appropriate for your organisation. Make sure to update and verify the level on a regular basis throughout the year to account for any changes as circumstances change.

#2. First in First Out

Many businesses follow the stock management technique known as “FIFO.” As a result, the equities that the corporation purchased first (first-in) must be sold first (first-out). This is extremely beneficial in preventing spoilage, wear and tear, or obsolescence of supplies, especially for perishable goods. You must save your new things in the system’s backend, ensuring that your present products remain in the façade for easy access.

#3. Maintaining Positive Relationships with Suppliers

For good stock management, your organisation must be adaptable enough to change. As a tiny company, things can change quickly and hurdles can occur, demanding last-minute replacement or expedited shipping. Maintaining a strong relationship with your supplier will benefit you in the long run. They’ll be more keen to collaborate with you to handle any replenishment concerns, provide better goods, determine minimum buy quantities, and possibly even negotiate lower prices.

A strong connection with suppliers necessitates clear two-way communication. Inform your suppliers whenever a change is expected so that they can adjust their manufacturing (for example, a sudden increase in orders). In exchange, they must notify you if a shipment is likely to be late so that you may plan ahead of time to avoid running out of supplies. If at all possible, avoid alerting people at the last minute because doing so just adds to the strain and tension on both sides.

#4. Have a backup plan.

A backup plan is widely used in risk management to prepare for probable future circumstances or incidents.

The following problems with stock management are just a few examples:

  • Unexpectedly high sales cause you to run out of inventory
  • Lack of available storage space
  • Inaccurate inventory calculations result in having too few things to sell
  • Insufficient financial flow to purchase stocks
  • When a vendor goes out of inventory, you still have requests to fill.
  • Late stock shipment

Because it is difficult to predict when such problems will occur, it is advisable to take safeguards now rather than later. Consider your response, the steps required to correct the problem, and the best method to minimise the impact on other elements of your operational procedures. When a disaster strikes, having a pre-planned response strategy can save you time and money.

#5. Accurate Forecasting

The most crucial aspect and the cornerstone of stock management is the accuracy of demand prediction. It’s critical to strike a healthy balance between possessing too much and too little stock. Given all of the potential stumbling blocks, this is an extremely challenging undertaking. Even if finding an identical match is impossible, you must make an effort.

#6. Quality Control is Everything

Don’t forget to check the stock’s freshness! This might be as simple as requesting your workers to do a brief quality inspection while reviewing your inventory for signs of deterioration. Furthermore, thoroughly inspect the labels on your goods to verify they are accurate in order to avoid errors during stock monitoring and control.

#7. Use a Cloud-Based Stock Management System or Software

Look for a software solution that provides real-time inventory and sales data from the several that are currently available. This indicates that you have access to the information whenever and wherever you are.

Best Practices for Forecasting Demand

Accurate demand forecasting is critical for good stock management since it assists organisations in determining the appropriate levels of inventory to keep on hand. Businesses can enhance their demand forecasting accuracy by implementing the following best practises:

  • Utilise Historical Data: Analysing historical sales data and identifying trends and patterns is one of the most effective ways to estimate demand. This can assist firms in better understanding the elements that impact demand and making more accurate projections about the future.
  • Incorporate Market Research: In addition to internal data analysis, organisations should consider external factors that may influence demand. Conducting market research, watching competitors, and staying current on industry developments and economic situations are all examples of what this entails.
  • Consider Seasonality: Many organisations have seasonal swings in demand, which must be considered when estimating demand. For example, a summer clothes store will most certainly see more demand during the warmer months.

What is Difference Between Inventory and Stock?

In summary, stock is a supply of finished goods that are ready for sale, whereas inventory contains both finished goods and components that go into making a finished product.

How Do You Track Inventory Easily?

An easy-to-use, robust inventory management software system is the best approach to keep track of inventories. You can use inventory management software to receive real-time notifications, add significant images to your inventory list, and use barcodes and QR codes to automate otherwise time-consuming and error-prone tasks.

What Makes a Good Stock Controller?

Organisational abilities are one of the most crucial stock controller qualities that employers seek for. These abilities will assist you in understanding current inventory levels and keeping good track of supplies and stock.

Is Inventory and Stock Management Same?

Inventory management assists firms in determining which stock to order, how much to order, and when to order it. The activity, also known as stock management, entails tracking the lifecycle of raw and finished items from the time a product is ordered from suppliers to the time it is delivered to clients, and everything in between.

How Do Companies Manage Stock?

Just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ), and days sales of inventory (DSI) are the four methods of inventory management. Each inventory management approach is better suited to different firms, and each has advantages and disadvantages.


Whether you have a physical store, an online store, or a multichannel organisation, stock management is vital if you want to function smoothly and give your customers with the service they expect. You will not succeed unless you employ inventory management tactics.


Leave a Reply

Your email address will not be published. Required fields are marked *