2.4.3 Stock Control

• Stock Control

  A means of checking available inventory to manage the products being sold
• Types of Stock

  -Raw materials that are processed into a good

  -Work-in-progress items are in the process of being made

  -Finished goods are completed products
• Minimum Stock Level


  The minimum stock held in case supply does not arrive or demand increases
• Reorder Level


  When stocks fall below a certain level and a new order is sent to the supplier
• Stock Levels


  Lines show how stock changes over time the EPOS system (electronic point of sale) tells firms when stock is sold
• Lead Time


  Time taken for suppliers to deliver stock once the order has been placed
• Waste Minimisation Strategies


  -identify inefficiencies eg. idle workers, late deliveries

  -JIT pressures managers to have higher standards, efficiency and productivity by reducing labour costs and waste
• Implications of Poor Stock Control

  -Opportunity cost as cash is held in assets

  -Cash flow problems if stock is not sold

  -Increased storage costs

  -Increased leasing costs

  -Increased stock wastage
• Lean Production


  Producing more by using less by eliminating waste
• Competitive Advantage of Lean Production

  -Maximise inputs from staff to create high labour productivity

  -Requires less stock, factory space and capital so has lower costs

  -Fewer defects and fewer engineering hours means a wider range of products
• Features of Lean Production

  -Focus attention on the quality of supplies and production

  -Minimises wasted resources by using JIT

  -Focuses on the competitive advantage of speed
• Stockholding Costs

  The overheads from the stock levels held by a firm
• Cost of Holding Too Few Stock


  -Lost orders as urgent orders cannot be met

  -Workers have more downtime

  -Loss of reputation if they cannot meet customer demand