Stock control

• stock control diagram

  
• Buffer stock = The minimum level of inventory a business aims to hold
• consequences of poor stock control = poor customer service, poor quality, poor reputation, poor sales, poor cash flow
• Just in time stock management = occur when a business holds no stock and instead relies upon deliveries of raw materials and components to arrive exactly when they are needed
• waste minimisation = strategies and practices adopted by organisations to reduce the amount of waste generated during their daily operations
• lean production = aims to cut costs by making the business more efficient and responsive to market needs
• holding buffer stock

  Advantages:

  • Stability in supply
  • Price stabilisation
  • Raw materials security
  • Competitive advantage

  Disadvantages:

  • Cost
  • Risk of obsolescence
  • Opportunity costHolding buffer stocks ties up capital that could be invested in other areas of the business
• JIT management

  Advantages:

  • Stockholding costs are minimised
  • Close working relationships are developed with a small number of trusted suppliers
  • Cash flow is improved as money is not tied up in stocks
  • Unused storage space is available for productive use
  • Teamwork is encouraged - employee motivation will improve 


  Disadvantages:

  • Bulk buying economies of scale  are not generally possible
  • ability to respond to unexpected increases in demand is reduced
  • Administrative costs related to frequent ordering are increased
  • Unreliable suppliers can quickly halt production