Stock control methods that can help distributors grow

Posted by Stephen Whitehouse on 25 Apr


Effective stock control is crucial for distributors who want to improve and maintain efficiency, increase profit margins and achieve business growth. However, depending on the type of products stocked and the warehousing constraints currently experienced, the most suitable stock control method can vary. Here is a summary of 5 highly effective methods that you could consider:

Just in time

This method is best used when you have a strong working relationship with suppliers and are confident that they can respond quickly and deliver new stock on time. As the just in time stock control suggests you should hold the stock only for very short periods of time - ideally once it comes in it will then be going almost straight out to its destination. The obvious threat here is you are unable to dispatch a product due to the supplier letting you down or is running late, which could throw the whole system out so, you will need to take this into careful consideration. If properly and efficiently implemented, a smooth-running 'just in time' system reduces the need for vast warehousing space, increases fulfilment capacity and help gain higher margins through improved efficiency.

Batch Control

Control stock by scheduling production in batches; as you'll need to make sure you have the right level of stock available for each batch you produce. This will help prevent excessive stock levels as you are ordering as you require the items. For regularly required components you can order fixed quantities or have an agreement in place with your supplier to send stock at fixed intervals. Careful preparation and planning is key to this method's success. Fixed purchase orders must be reviewed and amended if there are significant changes in demand. 

First in, first out

The principle of first in first out is most effective for companies dealing with perishable stock; the use or dispatch of stock should be determined by the date of arrival into the warehouse. For example, if you were to distribute new stock first there will be further delays to when older stock can then be sold and when it does get sent out it may be too close to its sell-by date to be any good. If properly managed, this system is a great way to manage and cut back on the waste of perishable items and minimise costs.

ABC analysis and classification

This is about optimising your stock storage area. Under this method, you will need to go through your products and split them into categories based on how quickly they move off your shelves - this will then form the basic layout of your warehouse:

  • A - Fastest-moving products
  • B - Fast-moving products
  • C - Slow-moving products
  • D - Slowest-moving products
  • E - Excess or unused stock 

Using the categories, arrange the location stock in a way so that A and B are closest to the preparation and shipping area.  Arrange C and D slightly further away but still accessible. E is then out of the way for only occasional use. You can also move products up and down these categories over time if necessary or as purchasing behaviour change. This system provides multiple benefits, like greater time and monetary savings through greater efficiency. You would also be able to clearly see which products are selling the fastest and need to take priority.

Developing a perpetual inventory system

Using stock control software, this is one of the more technical methods to implement - if done correctly it could lead to a surge in margin and efficiency. If you implement an inventory optimisation programme alongside an effective warehouse management system, then you are able to keep a continual eye on the exact levels of each individual stock you own. In comparison to a periodic inventory system, where you only measure stock levels at certain periods, you can make fast and accurate judgements on what needs to be ordered in and deal with any potential shortage issues before they arise. Clearly, this is quite an advanced system but it could be something to strive towards in the long run if you are trying to build a sustainable and fast-growing company.

WinMan specialises in advanced distribution ERP software which can help distributors meet their needs and hit targets. Covering aspects all aspects such as MRP, project management, stock control, supply chain management and CRM; an integrated system like WinMan, can assist you in setting up and managing an efficient inventory system and help streamline other areas of your business.

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Topics: Warehouse Management Systems

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