Logistics FundamentalsSupply Chain

Stock Control Systems (3): Efficiency and Visibility

All forms of stock control system must be kept fully up to date. If they are not, there is a risk of stockout: customers may order goods that cannot be delivered due to there being no stock. Also, if a downstream customer places an order for an item that is listed as in-stock, and is then informed of its unavailability, there is a risk of customer disappointment, loss of credibility, and lost business.

Out-of-date stock information can also disrupt the reordering process: stock may be ordered at the incorrect time or in the incorrect replenishment quantities, which would incur wasted operational cost, excess inventory, and unnecessary pressure on tier 2 suppliers.

There may also be negative financial/accounting and administrative costs of out of date stop control information. The company will struggle to accurately value its existing inventory, which may represent a core fiscal asset that must be insured, and may be used as collateral for business credit or loans. If the data in the inventory control system is audited and found to be not up-to-date, the company risks severe penalties.

A location-identifying number is usually attached to a product. This allows operatives and other users to identify any product’s proper place of storage in the warehouse. A typical location-identifying number/code will contain digits that identify the aisle, shelf number, shelf level or area/section, and, possibly, the number of the bin into which the item is placed. The location identifying number/code is usually printed on a label that also features a product identifying code and a barcode, QR code, or RFID sticker. The product identification code, the location identifying number/code, and much more will also be readable through the barcode/QR code/RFID sticker.

Location-identifying numbers appear on printed or screen-displayed picklists. They allow operatives to find and retrieve items quickly, perform visual stock checks, note imminent replenishments, and (re)allocate space (they may notice, for example, that a very small item is occupying space on the shelf that could be better used for bigger items. Location-identifying numbers/codes therefore contribute to stock control and general efficiency in the warehouse.

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