Stock management

What is stock management?

Stock management is a crucial element of almost every company that trades and therefore sells products. Stock represents value, which is why it is essential to properly manage the flow of incoming and delivered products.

The importance of good insight into your stock

Every company determines its delivery strategy: to order, i.e. with a waiting time, or from stock. In the first case the stock is limited; in the second model an extensive stock allows the seller-supplier to deliver immediately, which of course requires an investment in stock. There are intermediate models in which a company keeps fast-moving products in stock and delivers more specific or relatively expensive products to order.

Good stock management ensures that you are never chasing your customers' orders. You always have enough units of your products in stock. At the same time, stock management also shows you clearly which products sit on the shelf (too long) and so take a big bite out of your available budget. Such products tie up your available working capital.

For fast-moving products, the seller-supplier will try never to let the stock per product type fall below a minimum level. That is the safety stock. At that level, an order is placed immediately to replenish the stock. A stockout means that the stock of a certain product unexpectedly drops to zero. The buyer then has to wait until the desired product becomes available again.

Stock management is a balancing act between the value tied up in stock (that is working capital) and the commercial policy the company wants to pursue. Anyone who works even partly with stock would do well to know the quantity per item and to keep track of how many units of each item are sold within a certain period. Not only does drawing up the annual inventory then go smoothly because there are reference values on a given date, but as a self-employed person or director you also keep an excellent feel for sales (what is selling well, what less so, and for which customers orders are outstanding).  

Stock management in onFact

onFact is an invoicing program, but onFact still helps with stock management based on the product database, the invoices issued and your own purchases via the 'Stock management' module.

Suppose your opening stock of product A is 12 and a purchase invoice for 25 units comes in. The stock of product A then becomes 12 + 25 = 37 units. As soon as a customer orders product A, for example 2 units, the stock will drop by 2 units to 23 upon delivery/invoicing. When that customer orders, even before delivery, onFact reports the virtual stock as 23, because the 2 units ordered are, as it were, ‘reserved’ for delivery. As a trader, you even get insight into pending sales versus sales still to be delivered. 

onFact helps you monitor the safety stock by setting a warning level – for example 50. If the stock of the item concerned drops below 50 units, onFact notifies you to reorder. This can also be done smoothly from onFact: place a direct order with your supplier via a purchase order. You immediately convert this purchase order into a purchase, which you then link to your stock. Efficient and simple!