2.4.3 Stock Control

• Stock - current asset held by a business to meet customer demand.
• Lead time - the time it takes between placing an order and receiving delivery.

  Re-order level - the level of stock which triggers an order.

  Buffer stock - stock held by a business to cope with unforeseen circumstances.

  
• Advantages of buffer stock:

  • Can meet customer demand
  • Can quickly respond to increases in demand
  • Continue producing if there are problems
• Disadvantages of buffer stock:

  • Cash is held up holding stock
  • More costs associated with stock holding
  • Risk of waste
• Effects of poor stock control:

  • Waste resources
  • Unable to meet demand
  • Damaged reputation
  • Loss of competitiveness
  • Difficulty valuing stock
• Lean production - working practices that focus on cutting waste whilst maintaining quality.
• 2 Lean Production techniques:

  • JIT
  • Kaizen
• JIT - a stock management technique to minimise stock holdings and minimise costs.
• Kaizen - a stock technique that focuses on continuous improvement.
• Advantages of JIT:

  • Less costs as stock is only bought when needed
  • Less working capital needed
  • Perishable items can be sold
  • Lower associated stock costs
  • Can encourage employees as they are trusted
• Disadvantages of JIT:

  • Employee stress
  • Rely on suppliers
  • Hard to meet surges in demand
  • High start up costs
  • Less benefit from EOS
• 7 deadly wastes of Lean Production

  • over-production
  • waiting time
  • transportation time
  • excess stock
  • excess motion
  • product quality
  • excess processing
• Stock control - the optimum quantity of goods that a business holds for the purpose of resale.
• Stock rotation - the flow of stock in and out of storage.
• Waste minimisation - producing goods and services at a given quality using minimal resources as possible.
• Work in progress - partially finished goods.