Nottingham & Sutton-in-Ashfield: 0115 940 2015 - Email enquiries@rumsby.com

Stock answers

Inefficient stock management can be one of the biggest drains on profitability.

At DK Rumsby we can provide businesses in the Nottingham area with assistance and advice on a wide range of business issues. Here are some thoughts on stock control...

If not managed efficiently, stock can be one of the biggest drains on profitability for a business.

Holding stock incurs costs in:

  • Warehousing
  • Personnel
  • Transportation
  • Insurance

Above all, it ties up cash.

Ideal solution

In an ideal world, every business would have no stock at all but would operate entirely on a well-tuned just-in-time (JIT) system with materials and parts arriving in the order and quantities in which they are needed for the manufacturing or assembly process.

But we do not live in an ideal world, and many small and medium-sized businesses do not have the resources or the sophistication to implement JIT. So if you must carry stock you need to be constantly on the lookout for ways to minimise the haemorrhaging it can cause to your hard-earned profits.

Reducing stock costs

Here are some suggestions for reducing stock costs:

  • Identify those materials that contribute the least to product variety and differentiation - that is, those that are commonly used in numerous different products - and use them as widely as possible
  • Check the quality and accuracy of goods received from suppliers. If you only spot the poor quality at the end of the process, it is too late...
  • …However, if you work closely with your suppliers and build up a relationship of trust, you may be able to cut down on the time spent checking the materials that come in
  • Wherever possible, reduce the lead time for ordering materials, but take care not to unwittingly create hold-ups in production
  • Constantly review sales trends and cross-reference them with stock requirements
  • Make sure delivery schedules are neatly choreographed with production - try to avoid holding any more finished products than you really have to.
  • Try to negotiate discounts on virtually everything that you buy and then negotiate terms for payments and interest rates.

Caution

Finally, a note of caution. Although it is generally best to keep stock as low as possible to avoid tying up capital, this might not always be the case if there are really significant bulk discounts available.  Also, if you decide to make changes to your stock levels or procedures, be sure to do so within the context of the business as a whole: never make stock decisions in isolation.

If you are in the Nottingham area and are looking for support and assistance from experienced accountants and business advisers, contact DK Rumsby.

Testimonials

Services for business

Minimise your taxes and relieve you of the administrative burden

Here at DK Rumsby, we provide businesses of various sizes and types with unique, tailored accounting and taxation services.

Learn more

Services for individuals

We have a large core of personal tax clients

DK Rumsby provide individuals with comprehensive accounting and taxation services.

Learn more

Specialist Services

We offer specialist advisory and support services to many businesses

Our highly-qualified team cater for businesses in a variety of specialist sectors and divisions.

Learn more

Copyright

© 2024 DK Rumsby & Co Ltd. All rights reserved.

We use cookies on this website, you can find more information about cookies here.

Registered in England & Wales Company No. 3941558
Registered Address: Sutton-in-Ashfield
VAT Registration No. 118 7566 46

Contact Us

Please call:
Nottingham & Sutton-in-Ashfield - 0115 940 2015

Quick links

Home | Contact us | Site map | Accessibility | Disclaimer | Privacy | Help |

Nottingham Office
3 Colwick Quays Business Park, Colwick, Nottingham, Colwick, Nottingham NG4 2JY

Sutton-in-Ashfield Office
66 Outram Street, Sutton-in-Ashfield, Nottinghamshire NG17 4FS