One of the biggest risks of not having a sufficient level of stock is “stock depletion”, that is not having enough stock to meet demand. And very accurate demand forecasting throughout the year. To bring us closer to this ideal situation, we need to have an ultra-efficient network of suppliers to meet our demands in very reduced timeframes and a supply chain that works perfectly. However, in reality, such a logistics situation is virtually impossible to implement in a warehouse due to the difficulty of maintaining this complex balance. The ideal situation would always be having just enough stock to meet all demands, but without having excess stock that would reduce the return.
This important question is asked when trying to determine the appropriate stock or inventory level for a warehouse the answer is simple but its implementation far more complex.Ī company’s correct stock level will always be that which gives it its highest return generally, that level is obtained by fully guaranteeing internal or external demands (depending on whether it is a raw material or final product) without accumulating excess stock in the warehouse. What is the appropriate stock or inventory level? The great dilemma The initial premise must always be that stock is an investment made by the company to meet demand or production needs and to be able to perform its activity normally.Īs with all investments, a future return is expected to be obtained from stock and therefore the decision on the amount of stock to store and method chosen for its management is of vital importance to achieve the company’s goals. Both raw materials and finished products can be considered products in stock, provided these materials are stored ready for their entry into production or final sale. Stock, also used as a synonym of inventory, refers to all or the quantity of products that a company has stored.
What is stock and how important is it to a company?
NON INVENTORY MEANING HOW TO
In one of our previous publications, we looked at how to correctly manage warehouse inventory, and then reviewed the different types of stock or stock classifications to determine which is the most appropriate for each company’s logistics management.
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