Why is stock management important for business success?


Having good stock management in place means you are always able to supply the right items, in the right quantities to the customers who want them. This means carrying the right amount of stock so that you minimise your costs, maximise your sales and therefore can boost your profits.

Getting your stock management right requires careful management of your end-to-end processes and affects your supply chain – backwards to suppliers and forwards to customers. Here’s why getting your stock management right is important for business success and how you can more effectively manage your stock using a WMS and other supply chain software.

What is stock management?

Stock management concerns the control of your stock. It involves a number of processes: the procurement of goods; storage, organisation and tracking of stock in your warehouse; and finally the sale and dispatch. Effectively managing this flow of stock from source through to sale helps to streamline your business processes, maintaining optimal stock levels and enhanced insight into your operations.

Stock planning and forecasting.

Good stock management takes the guesswork out of reordering. With insight into sales order information, you know what’s being ordered and when. This helps you manage seasonality and successfully navigate the sales peaks and troughs of your industry.

Warehouse operations are all about getting the balance right. The balance is between not having enough stock and perhaps risking lost sales – and being overstocked and therefore unnecessarily tying up cash in stock. Neither is good.

But using a WMS – sometimes alongside a planning and forecasting solution – ensures you order the right amount of stock without having to make wild estimates. This optimises stock levels. Keeping buffer stock ‘just in case’ becomes redundant, yet you always have enough items in stock to keep customers happy.

With the advanced replenishment functionality of a WMS, out of stock situations are minimised and sales are maximised. The feature employs adaptable forecasting algorithms to optimise your stock holding and reordering. When you are running low on stock, your WMS notifies you and makes specific recommendations about which goods to replenish and in which quantities.

Stock accuracy.

Stock counts are critical to stock management. They ensure that you know what you have and where it is. For companies that hold stock across several warehouses, or those that carry thousands of SKUs, is it especially relevant that stock levels are entirely accurate. Stock accuracy enables businesses like omnichannel operations to effectively fulfil orders, regardless of where they come from. For example, if you sell through a marketplace or two, your own website, and multiple store locations – and you’re perhaps running multiple warehouses and fulfilment centres – it’s essential to know how much stock you have and where it is.

Cycle counts are an additional feature of a WMS that maintain stock accuracy but by only counting some lines or some pick faces. Some companies will manage cycle counts so that they cycle count the fast-moving SKUs most frequently, with other items counted less often. This means that they are certain of stock levels for their most important goods.

Improved customer service levels.

No business wants to compromise customer satisfaction. Inventory control helps keep customers happy by reducing the risk of out-of-stock situations. There’s therefore no need to put items on back order and no risk of lost sales. 

When you’re always able to satisfy customer demand like this, and because your stock is accurate, customers will receive the correct orders. Happy customers return fewer orders, come back to shop with you regularly and also give you better reviews. With fierce competition in some markets, customer loyalty is vital, especially if there is little to differentiate providers other than price. Having good stock management can be enough to keep your customers from going elsewhere.

Efficiently managed returns.

When customers do return orders, good stock control helps to streamline the process. A WMS will manage the return through any quality control checks before directing the warehouse staff to return pristine stock to the correct warehouse or depot, while reassigning the item into stock. Alternatively, damaged stock can be logged as shrinkage and processed for disposal.

Better stock security.

Clear visibility helps to prevent losses due to damage and theft. Your WMS can alert you to any stock discrepancies and issues and can also deter staff from theft. Employees are less likely to steal from you if they know that regular counts are being undertaken and that operator IDs can be linked to warehouse areas or items that they have picked.

 With increased stock visibility, you can see what is missing and remedy security issues, better protecting your valuable goods.

Improved stock turnover.

High levels of stock turnover – or stock turn – suggest that sales are strong and that no excess stock is being held. With good insight into your stock, you can readily identify slow-moving stock – which you can then promote or discount to help it move more quickly. You can also see what’s selling well and ensure you have good levels of availability.

Two features of a WMS – directed stock rotation and dynamic stock movements – can help here. Using these, the system dynamically manages stock placement and stock movements based on your business requirements. Products are positioned and handled according to various criteria, such as sales volume, product size, whether it needs to be consolidated with other stock, or on a FIFO method, for example.

Measuring and acting on your stock turn rate helps you to sell more and to minimise your stock-holding – increase profit and reducing costs.

Greater productivity.

The automation you get with an inventory management system adds up to significant time savings. You can automate workflows so that you don’t need to manually create purchase orders and invoices, or re-input information into a different system. There’s no need to manually create picking sheets and if you employ hand scanners, your staff can complete stock takes more quickly and easily than if done by hand.

If you undertake cycle counts, these can be done at the most convenient times – between picking or putaway for example – further boosting your warehouse teams’ productivity

With directed putaway and dynamic stock movements, the WMS will ensure your stock is placed in the best locations, assuring the easiest access or for faster picking and less travelling across the warehouse.

Better business performance insights.

A stock control system helps you understand your profit margins better. You can easily see where your profits are coming from – which products are most profitable and which customers. This visibility helps you to focus your resources in the right way. Again, you’re not having to guess this information and you can direct your efforts to support the business in the right way.

 Insight about your stock helps you make better business decisions.


Your stock is one of your greatest assets. Many companies hold stock worth significant sums of money. So, it is vital that you manage it well.

Good stock management helps you stay better organised, gives you Improved oversight and saves you time and money. With a clear picture, you will manage your stock assets better, forecast appropriately and sell more.

With higher productivity, better customer service and increased loyalty, you will see improved sales and more revenue. Then, you’ll reduce and control your operating costs by holding less stock and cutting staff costs. Combine these two factors and the result is more profit.

Managing your stock well gives you the best chance of business success.

For more information on managing your stock with end-to-end supply chain software such as WMS, ERP, and inventory planning, call us on 020 8819 9071 or get in touch for more information.

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