Working Stock
A good warehouse manager knows the importance of Working Stock control. With proper inventory control, a company can easily determine the exact amount of stock they need and avoid stock piling up in their warehouses. This gives the company an idea of their current supply and demand situation, which will enable them to plan and prepare their supply chain for future needs. It is important to control the stock to avoid out-of-balance supply and demand situations which can also affect your bottom line.
There are several ways to calculate your working stock inventory, including the use of cycle-stock inventory, first in/out inventory, or live stock level. (a) In this article we will examine the method used by major retailers, department stores, pharmacies, supermarkets, manufacturers and distributors to calculate their inventory. (b) We will examine how companies can save money by controlling their inventories. (c) Finally, we will examine how these inventory issues affect the companies' overall profitability.
First in/out inventory is a common method used by retail chains to determine their average holding inventory (ascending). This is done by taking the first date of sale of a product, then comparing it to the product's last known purchase date to calculate the average number of days it has been held. The result is a good indication of how many units a company should be selling to make up for any sell-through stock that was received from last month's sale. (d) Another important indicator for determining safety stock levels is the number of days your product is on display at one of your outlets. This will tell you how much inventory you need to hold back.
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