Inventory Control | Stock Control Assignment
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Added on 2019-10-18
Inventory Control | Stock Control Assignment
Added on 2019-10-18
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BLOG: STOCK CONTROLWHAT IS THE PURPOSE OF STOCKCONTROL?
STOCK CONTROL10th August 2019The term inventory or stock is one of the key terms used in business. This term is used for theproducts (finished goods) available in a company's hand for sale along with raw materials thatare used for producing such products available for the purpose of sale. Inventory or stock standsas one of the most vital assets of a company because the turnover of stock represents itself as oneof the key sources of the company's revenue generation as well as subsequent earnings for itsshareholders. In the ordinary course of business, inventory is a type ofassetwhich is meant to besold. Inventory is not something that could be sold out immediately if that does not stand as afinished product in form. The items considered as inventory fall into any one of out the belowstated three categories:Underlying in the manufacturing process of being produced for saleHeld for ordinary sale in the regular course of businessThe supplies or materials that are intended to consume in the process of production.The above stated classification of asset includes all the items that are purchased as well as heldfor sale or resale by manufacturing and retailing companies. On the other side, in serviceproviding companies, inventory stands as the cost of a particular service, for which the expectedrelatedrevenueis not recognized or generated yet. In the accounting system, inventory or stockis classified into three different categories such as Raw materials that include materials that arebeing consumed by a company in the process of producing finished goods. Work-in-process, thatincludes all the items that are underlying in the middle of the company’s production process,which means that are not yet ready to get sold to customers, and Finished goods which includegoods or products ready to get sold to customers. Inventory is also grouped as a type ofshort-term asset because it is generallyliquidatedwithin ayear. Inventory is one of the most vital elements of a company’s production process as without itproduction could not be started. Following this, if production could not get started, then the
finished inventory which is ultimately sold to customers for generating business revenue is alsonot available. Due to this reason, inventory or stock must be controlled in a proper manner toensure its availability for continuing production and sales related core business activities of acompany. Inventory or stock controlrefers to the processes that are employed to maximiseinventory utilisation by a company. The main goal ofstock controlis of generating maximumprofit through the least investment in inventorywithout encroaching upon the satisfaction levelsof customers. In considering the impact of inventory or stock control on profits and customers,stock control stands as a chief concern of companies that have huge inventory investments likelarge-scale manufacturers, distributors, and retailers.Definition and Purpose of Stock ControlStock control is defined as the practice of a company to balance the requirement of maintaininginventory levels against cost. The ideal result of stock or inventory control is the least investmentin the inventory and still being capable of fulfilling customers' orders on-time. It is the processthat helps a company to ensure that appropriate volume of stock to be maintained throughout theyear by it in order to conduct the regular course of business and to continue its practices ofmeeting the demand of customers without delay. Stock control is also known as a process ofkeeping total costs related to stock holding at a minimum level. Stock controlor inventorycontrolis broadly defined as the activity of checking stocks of a shop.It is a methodical practiceof verifying inventory of a business as well as focusing on a number of related facets attached toinventory management such as future demand forecasting.Other facets in relation to stockcontrol includeproduction control, supply chain management,customer satisfaction, andfinancial flexibility.Basically, stock control stands as an organisational practice of managing and monitoring thevolume of stock in amount either kept in storage or underlying on selling floor at any point oftime. It is highly significant to done efficiently as stock or inventory is the only largest assetpresent in the store which liquidates in short-term and at a regular interval. The purpose inrelation to stock or inventory control is to ensure and have required amount of stock in hand toavoid any kind of interruption in the production process without having excess inventory to sell
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