Stock optimisation : how to reduce stocks for better efficiency ?

Good stock management allows a company to increase its turnover. An efficient and optimised stock management policy ensures that companies reduce their costs. This is achieved by avoiding overstocking and understocking, both of which have a negative impact on the company's results.

Optimised stocks to avoid overstocking

Overstocking is expensive. In order to eliminate it permanently, the solution is to have good stock management. By optimising the replenishment strategy, for example, storage costs can be incurred.

The use of a complete and autonomous stock management software like Monstock can be a way to better manage stocks.

The FIFO method for optimising your stocks ?

What is the FIFO method ?

The FIFO technique stands for First In First Out. It is based on the principle that the products purchased first are the first to be taken out of stock.

This not only allows perishable products to be consumed before their expiry date, but also reduces storage costs. If the FIFO stock is well managed, the products in stock will correspond to the most recent purchases.

The organisation of stocks on the FIFO model requires a rigorous organisation of the storage. By respecting the FIFO method, the shelves are at their most optimal during storage. New products enter on one side and leave on the other. This means that it must be possible to move around on both sides. If the shelf is only accessible from one side, the stock will be LIFO (last in, first out), unless there is a mechanical device such as a turntable.

3 key elements for optimising your stocks 

- Calculate the key indicators for optimising your stocks

In order to optimise your stocks, you need to monitor and calculate the stock turnover ratio.

To calculate the stock turnover ratio, start by calculating the average stock over a given period (generally one year). Then add up the value of the stock at the beginning of the year, then the value of the stock at the end of the year and divide by two.

- Optimising stocks by reducing dormant stocks

Optimising stock also means minimising dormant stock that is condemned to languish in a warehouse, leading to high management costs, which is a real problem.

To avoid the accumulation of dormant stocks, regardless of the inventory management model applied by the company, it is recommended to monitor consumption directly. Accurately monitoring changes in demand allows for greater responsiveness if a product stops flowing.

- Optimise stocks by identifying supply chain hazards

The hazards of the supply chain are of increasing concern to companies, however, managing hazards is relatively complex. Indeed, it is first necessary to analyse where the problem comes from, is it linked to the company's organisation ? To the distribution ? To the demand ? To the financial markets ?