Língua Inglesa – Gestão de

Stocks

Managing stock effectively is important for any business, because without enough stock, production and sales will grind to a halt. Stock control involves careful planning to ensure that the business has sufficient stock of the right quality available at the right time.

Stock can mean different things and depends on the industry the firm operates in. It includes:- Raw materials and components from suppliers- Work in progress or part finished goods made within the business- Finished goods ready to dispatch to customers- Consumables and materials used by service businesses

In order to meet customer orders, product has to be available from stock – although some firms are able to arrange deliveries Just in Time. If a business does not have the necessary stock to meet orders, this can lead to a loss of sales and a damaged business reputation. This is sometimes called a ‘stock-out’.

It is important therefore that a business either holds sufficient stocks to meet actual and anticipated orders, or can get stocks quickly enough to meet those orders. For a retailer, in practice this means having product on the shelves.

However, there are many costs of holding stock, so a business does not wish to hold too much stock either.

The costs of holding stock include: - The opportunity cost of working capital tied up in stock that could have been used for another purpose - Storage costs – the rent, heating, lighting and security costs of a warehouse or additional factory or office space - Bank interest , if the stock is financed by a loan - Risk of damage to stock by fire, flood, theft etc; most businesses would insure against this, so there is the cost of insurance - Stock may become obsolete if buyer tastes change in favour of new or better products - Stock may perish or deteriorate – especially with food products

What is Stock Management?Every business needs to keep track of the items that it manufactures or sells (the stock). The system that monitors the items in stock is called the stock control system.

E.g. in a store, the stock includes all of the items on the shelves and out the back in the storeroom. 

Data in a Stock Control System

A stock control system is basically a database.

Each record (row) of the database is identified by an item code (the primary key). 

Other fields in each record would include:

•Description•Item price•Stock level (the number of items held in stock)•Minimum stock level (when stock falls below this, it needs to be reordered)•Reorder quantity (how many items we should order each time)

Receiving New Stock

When items are added in to stock (because a delivery has arrived) this is recorded in the stock control system.

The code of the new items is input to the system (usually using a barcode scanner, or similar technology). The record for the item is found in the stock database, or a new record is created, and the stock level is increased.In many stores, the system is directly linked to the stock control system, so that stock levels are adjusted as soon as an item is sold.

Selling / Delivering Stock

When items are taken from stock (because they have been sold, or delivered somewhere) this is recorded in the stock control system.

The code of the item is being sold/delivered is input to the system (usually using a barcode scanner, or similar technology). The record for the item is found in the stock database, and the stock level is decreased.In many stores, the system is directly linked to the stock control system, so that stock levels are adjusted as soon as an item is sold.

Automatic Re-Ordering of Stock

Stock control systems make it very easy for stock levels to be monitored, and for stock to be reordered when it is running low.

The stock control system regularly goes through all the records in the stock database and checks if the stock level is less than the minimum stock level.

If the stock is too low, it is reordered from the supplier.The quantity that is ordered is read from the stock database (larger amounts for more popular items)

Why a business keeps stocks?

A. To ensure sufficient goods are available to meet demandB. To provide a buffer between production processesC. To meet any future shortagesD. To take advantage of bulk-purchasing discountsE. To allow production to flow smoothly and efficientlyF. As a necessary part of the production process (work-in-progress)G. As an investment (during times of raw material inflation or possible shortages)H. To provide customers with a wider choice of products

What costs might incur as a result of holding stocks?

A. Storage costs (e.g. rent, lighting & heating of a warehouse)B. Payroll costs of staff who look after stocksC. Interest costs - where stocks tie up finance on which interest has to be paidD. Insurance costs - the larger the value of stocks held, the greater nsurance premiums are likely to beE. Obsolescence costs - the longer stock is held, the more likely that it is no longer useable or saleableF. Stockout costs - which arise if stocks are kept too low (e.g. loss of margin from sales, loss of customer goodwill)

Why a business might want to order stocks using fewer, larger deliveries?

A. Obtain bulk discountsB. Reduce the costs & disruption of handling stock deliveriesC. Reduce the amount of administrative work

What factors a business ought to take into account in deciding what the optimal level of stock should be?

A. Demand - is it growing, stable or declining? How volatile is demand in the short-term?B. Nature of the product - is it fast-moving, complex, likely to become obsolete?C. Nature of the stock - is it perishable? Is it bulky? Does it require special stockholding facilities? (e.g. air-conditioned)

D. Financial resources of the business - can it afford to finance high values of stocks?E. Type of production process - is production able to receive stock at regularintervals? Are buffer stocks required to keep production flowing?F. Cost of stock outs - what is the opportunity cost if the business runs out of stock?