Stock management: Meeting demand, ensuring continuity, and controlling costs

Stock management is essential for any purchasing organisation and forms the backbone of logistics processes. An effective stock management system helps organizations find the right balance between supply and demand, ensuring that there is always enough stock available without unnecessary storage costs. Consider, for example, a university that needs real-time updates on laboratory supplies to ensure continuity in research, or a healthcare institution that automatically orders new medical devices as soon as stock falls below a certain level.

In this article, we discuss why stock management plays a crucial role in every organization and how modern purchasing software with integrated stock management features supports finance and purchasing professionals in their daily tasks.

10 december 2024

Inextricably linked: Purchasing and stock management

Always sufficient stock

Procurement and stock management are closely linked, with good stock management helping to control costs, prevent stock shortages, and increase efficiency. By employing the right procurement software, procurement and stock management teams can collaborate to ensure that the right products are ordered and delivered at the right time, thereby preventing stockouts and overstock.

Demand forecasting and stock planning are crucial elements in this process. With the right procurement software, including stockmanagement functionalities, organizations can analyse historical data and accurately predict future demand. This enables procurement teams to make proactive purchasing decisions.

KPI's for stock management

Do you really want to improve your stock management? Then it is essential to monitor performance with the right KPIs. Three important KPIs:

Average stock value

Keep track of the average value of your stock to analyse trends and avoid excess stock.

Turnover rate

Measure the speed at which stock is consumed by dividing the annual cost of goods sold by the average stock value.

Backorder percentage

Calculate the percentage of orders that cannot be delivered immediately. This helps to identify shortages in stock and improve delivery reliability.

Stock management as an integral part of your purchasing software

It is clear that stock management cannot be seen separately from purchasing. But which functions are important? Here are some essential functionalities that modern purchasing and inventory management software should have:

Real-time inventory tracking: With real-time updates after each transaction, purchasing teams can quickly respond to changes in inventory levels.
Order levels and safety stock: Setting minimum and maximum stock levels to automatically generate a reorder suggestion when stock falls below a certain level.
Location-based stock management: For organizations with multiple warehouses, this provides insight into the reorder point, maximum stock, and reservations per location.
Demand forecasting and planning: Analyse historical data to accurately predict future demand and prevent stock shortages.
Supplier management: Keeping track of supplier information to consistently choose the most reliable suppliers.
Automation of purchasing processes: Automatically generating purchase orders to save time and costs.
Reporting and analysis: Detailed reports on stock levels and turnover rates to provide insight into stock trends and support decision-making.
Internal webshop: For internal orders, ensuring approved requests are processed and delivered efficiently.

Practical tips for optimal stock management

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With the right insights and tools, you can elevate stock management to a higher level. Whether you work at a university, healthcare institution, or another company focused on logistics, effective stock management can make a world of difference. Does your organisation have specific stock management needs? We are happy to think along with you.

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