What Is Stock Control?

by Daniel R. Mueller; Updated September 26, 2017
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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.

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 veteran salesman 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.

Stock Control Tools

In modern retail, stock control tools take the form of a network of digital devices, including hand scanners that read bar codes and point-of-sale systems, that also scan these codes to the database computers in the manager's office. These computers store and process all location-specific data. The chief importance of these new innovations over pen and paper or mechanically printed receipts is that data can be gathered in real time by the computer and fed into a spreadsheet. These spreadsheets automate the processes of graphing and quantifying sales statistics, allowing managers to react quickly to changing demands of the market. Modern stock control tools quite literally give retailers an advantage over their competition who still use simpler methods. The downside of new digital stock control tools is that they require a fairly sizable capital investment to set up, meaning that the ticker tape cash register and ledger book are still attractive options for small time mom-and-pop operations.

Interpreting Inventory Data

Computerized stock control systems use algebraic equations called algorithms to determine the ebb and flow of demand for a particular item. The statistic generated by the computer, based upon historical sales of the item, is then winnowed down by the computer into a suggested purchase order number, which the purchasing manager or employee reviews before finalizing a product order.

Setting Up a Red Flag System

Depending upon the technical capabilities of the equipment at hand, a retailer might choose to set up a digitized inventory red flag system allowing them to react when demand exceeds supply for the specific item, thus preventing shortages. In order to do this, an IT consultant simply needs to modify the inventory management spreadsheet to highlight products deviating from the historical sales pattern. The IT consultant also has control over the margin of deviation allowable before a product is red flagged. The old-fashioned approach also works either as stand-alone or as complement to a digital system, in which clerks informally report their managers about which items are selling unusually quickly or are running out of stock.

About the Author

Daniel R. Mueller is a Canadian who has been writing professionally since 2003. Mueller's writing draws on his extensive experience in the private security field. He also has a professional background in the information-technology industry as a support technician. Much of Mueller's writing has focused on the subjects of business and economics.

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