Maintaining adequate stock levels is essential to running a successful business – these tips will help you avoid overspending and underspending on stock.

Maintaining adequate stock levels is essential to running a successful business – these tips will help you avoid overspending and underspending on stock.





Use inventory software

Inventory software provides control over all aspects of stock and supplies, integrating related processes into a centrally accessible software package. As your business functions, the software can advise you of necessary action, such as ordering new products once your stock hits a certain level. This can help you make logical decisions to help avoid overstocking.







Use effective stock management

There is no ‘one size fits all’ solution for stock management. A number of methods are commonly used in business depending on the type of company and the industry in which it operates.



  • Stock reviews – regular reviews of stock levels are made. Stock is reordered if it reaches a minimum threshold
  • Fixed-time/fixed-level reordering – stock is ordered at regular intervals and for a fixed value, for example 240 boxes every second Monday of the month
  • Just in time (JIT) – stock is ordered at the last possible minute to decrease costs and improve cash flow
  • Economic Order Quantity (EOQ) – a complex formula is used to judge optimal stock levels. Companies order stock when levels drop below the threshold

Please read our full guide to stock control methods for more information on different methods of stock management.

Define processes and stock types

Carefully defining the processes involved in production, and the types of stock required, are important to ensure your business maintains appropriate levels of stock at the right times. There are four main types of stock:

  • Raw materials – components used to create new products
  • Unfinished goods – materials that are in the process of converted to products
  • Finished goods – products ready for entry into the market
  • Consumables – additional resources used in the production process e.g. fuels, pens, gas canisters

By understanding when and where in the production process the various types of stock are needed, businesses can more easily maintain stock at optimal levels. Here’s an example to show how this works:

  • Tthe production process takes two weeks and a new order is due in three weeks
  • Check to see whether there are unfinished or finished goods available to fulfil the order.
  • If there are, no action on stock is necessary. If there aren’t, check to see whether the are sufficient consumables and raw materials to fulfil the order through production
  • If there are, production can commence. Otherwise raw materials and/or consumables must be ordered

By following this process companies help ensure there is a minimum of superfluous stock held at any one time.

Stock security

Damage and theft not only affects stock levels but also hits your bottom line. Stock should be delivered to and kept in a secure area, preferably with CCTV or similar protection. Staff should be trained to follow specific safety procedures in order to protect stock, such as recognising distraction burglaries and escalating issues to senior management should security concerns arise. Firms may also wish to know what security steps suppliers are taking; a damaged or stolen pallet of stock could mean the difference between fulfilling an order and disappointing a valuable customer.