Purpose of Stock Control: Assignment
Added on 2019-10-18
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In business, the most important thing which is necessary to be controlled is its stock or alsoknown as inventories. It has been considered that a company can run its business automaticallywithout its employees but not without adequate stocks which may lead to loss of customers whentheir demand is not met. We all have heard about stock management in business. Every businessneeds to maintain the stock of their services or products for avoiding stock out. The mainpurpose of stock control is to decrease the stock as well as the expenses of holding stocks whilekeeping in mind that the business has sufficient stocks to meet the demands of the customers. Itshows how much stock a company has at a time and the ways it keeps track of these stocks.Stock control refers to the control covering stocks at all the stages of the production process ofyour business including purchase as well as delivery to use and re-ordering. Everything a business use to make the products from raw materials to finished good is processedby stock control and stock management. It makes you able to have a sufficient amount of stocksat the right time and the right place. Stock control is something that comes very first in mind inthe business for the wholesale distributors. Therefore, it is essential for the managers to kepe atrack of the necessary inventories using the control mechanisms that will be discussed in thisarticle. The challenges due to the shortage of your products or services can harm your business’ssupplies. The stock control issues can completely take your significant customers to some othersuppliers who have adequate sources to manage their inventories. If organizations have controlover its stocks, it can serve to the maximum satisfaction of the customers as well as providemuch more satisfactory customer services. This also gives a clear idea about what are thedemands of the market and what the customers may not prefer. On the other hand, this does notmean that you do need to have excess stock unnecessarily which will lead to prompt loss of
profit. The fundamental key to stock control is to better understand about the demands of theproducts and the preferences of the customers. Thus, the key purpose of stock control is to trackas well as account for the products the organizations manufacture and sell. It confirms thatexpenses are not tied up without necessity and prevent problems that may occur in the supplychain.Thus, it can be said that the shortage of stocks or inventories might lead to huge loss in businessas well as loss of customers to the rival companies. It will now be necessary to discuss about thediverse stock controls and the mechanism used for inventory management.Typesofstocks A business has stocks all over its production of products or services. There are mainly four kindsof stocks and these are:a)Raw materialsb)Work in progressc)Finished goodsd)Consumables Raw materials stocks refer to those components which are brought from the suppliers andready to be used for manufacturing the products. This is one of the most important stocksbecause, if there is no stock of raw materials or there is a shortage, the company will fail to meetthe demand of the customers at specified time. For this stock, the companies must know thereliability of the supply as well as accessible alternative sources. If the managers are predictingthe demand in the future and product are to be delivered in batches, there should be a stock ofraw materials. Work in progress stocks are those stocks that are unfinished and still in the
process of production. This can be a useful method for protecting production in the case ofproblems occurring with other supplies. Finished goods are those stocks that are ready to be soldin the market and used by the customers. The businesses can have the stock of finished goodswhen there is certainty in demand or it is working for large orders or products are made inbatches. A consumable stock refers to stocks that are necessary for the day to day running of thecompany and requires updating. This type of stock depends on various factors such asconsistency of the supply, nature of demand, an expectation of a rise in prices and discount forpurchasing in bulk. The categories of the stocks can be further divided according to the value of the productsincluding low, medium as well as high-value categories. This is applied when the stock levelsdepend on limited capital.How Much Stock Should A Business Keep? This is one of the most important purposes of stock control to determine the quantity of sockthat a company must have. For the efficient running of the business, the companies should beaware of its stocks in the production. An organization must also know how much stocks shouldbe kept in provision in cases of any emergency. Keeping lots of stocks is easy to manage and have lower management expenses. The businesswill never run out of products and buying in bulk could be less expensive. On the other hand, itrequires higher storage as well as insurance expenses. Your capital may be tied up and some ofthe certain goods may reach its expiry date and even become outdated before they are sold. Keeping a little stock or no stock at the time of maximum demand, asking and negotiating withthe suppliers to distribute will make your business flexible as well as efficient as the company
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