How to Manage Stock When Growing Rapidly

How to Manage Stock When Growing Rapidly

As your business grows, your stock levels increase. This can present a number of issues, especially if you are growing at pace.

But there are ways that growing companies can manage their stock. Here’s a look at the stock management issues that can crop up for rapidly growing companies – and how you can address them.

Carrying More Lines

As you grow, you will stock an increasing number of lines. Growing your portfolio of products allows you to offer more choice so you can more readily meet customer needs.

You may have increased the products you in response to specific customer demands. Your customers may have expressed an interest in buying additional products from you. Or it may have been a natural progression to stock new lines, perhaps taking on products that complement your existing portfolio.

Although it will have been a strategic decision to expand your business in this way, this sort of growth comes with associated problems. Firstly, it becomes harder to efficiently manage all these lines, especially if you are relying on spreadsheets. Logging detailed information for an increasing portfolio of goods becomes unwieldly as it gets harder to record and track stock movements, pricing, supplier information, bin locations and more.

Carrying more lines also puts pressure on your available warehouse storage space and could see you needing to hire temporary facilities or expand your own warehouse – both of which increases your operational costs.

One way that a warehouse may try to manage storage of an increasing number of lines is by reducing stock levels in general. But this has its own problems. You run a greater risk of having out of stock situations and not being able to fulfil customer orders. In turn, you might need to rush orders from your suppliers, which will cost you more than usual and affect your profit margins.

Raising Your Stock Levels

Conversely, some warehouses will aim to carry higher quantities of each item so that they can be sure of having sufficient stock to always meet customer demand. Disappointing a customer may mean they stop buying from you or they leave you a poor review. So, maintaining high stock levels is often a proactive strategy.

But it puts pressure on warehouse space and keeps more of your money tied up in your stock. Having a lower level of working capital impacts your ability to continue to grow. You might not be able to afford to take on new staff to support your growth or may even default on supplier debts.

Your stock turnover rate will also decline and – depending on your industry – you risk your stock becoming obsolete.

Improving Your Stock Management

And as you continue to grow rapidly, if you both grow the number of lines you stock as well as increase your stockholding for each one, it just becomes a worsening cycle of issues.

So, what can you do about it? You can take steps to optimise your stock and manage its availability. This can be achieved through improving your forecasting, which helps you better balance supply and demand. In this way, you will be able to hold more precise levels of stock and set more appropriate replenishment factors.

By looking at historical demand, then applying adjustments or factoring in variables for other assumptions or seasonality, you can more readily forecast future needs.

You can also optimise your product lines so that you do not always hold too much stock. Many businesses follow the Pareto principle, whereby they generate 80% of their profits from just 20% of their stock. That isn’t to say that you should eliminate the less profitable 80% of the stock. Instead, you should plan to use the 20% of stock in the most effective way possible.

Prioritising by demand can help you to maximise stockholding on these fastest-moving or most-profitable lines, while minimising what you hold for items that don’t bring the same value for the business.

Forecasting and demand planning is easy with ERP software such as NetSuite. All order data is tracked and the built-in and customised reports help you easily analyse sales volumes, costs and value to the business.

NetSuite’s Advanced Inventory module lets you set stock replenishment according to demand. With data on order frequency and quantities for each item you stock, you can better predict reorder points, ensuring your replenishment is optimised. This lets you reduce your stockholding but doesn’t risk that you will be unable to fulfil orders, which maintains your levels of customer satisfaction.

With real-time stock control and visibility across all your channels and warehouse locations, NetSuite automates and streamlines processes, optimising stock management and bringing greater efficiency and profitability for fast-growing operations.

Contact us for more information on how NetSuite can enhance your warehouse business.


More Information

Stephen Adamson


[email protected]

(+44) 115 758 8888
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