Stock Keeping, Features, Methods

Stock keeping refers to the systematic management and organization of inventory or stock within a business or organization. It involves the storage, handling, and monitoring of goods to ensure they are available when needed and in optimal condition for use or sale. The primary objectives of stock keeping include maintaining accurate records of inventory levels, minimizing stockouts and overstocks, and maximizing space utilization in warehouses or storage facilities. Effective stock keeping practices often involve implementing inventory management systems, barcode or RFID tracking systems, and periodic stock audits to reconcile physical stock with inventory records. By efficiently managing stock keeping processes, businesses can improve operational efficiency, reduce costs associated with inventory management, and enhance customer satisfaction by ensuring timely availability of products.

Features of Stock Keeping:

1. Inventory Classification:

Goods are classified based on various criteria such as value, demand frequency, and storage requirements. This classification helps prioritize management efforts and resources.

2. Accurate Record Keeping:

Maintaining precise records of inventory levels, movements, and transactions is crucial. This includes real-time updates through inventory management systems to ensure accuracy and reliability.

3. Safety Stock Management:

Incorporating safety stock levels to buffer against unexpected fluctuations in demand or supply chain disruptions. This helps prevent stockouts and ensures continuity of operations.

4. Inventory Optimization:

Continuously monitoring and adjusting inventory levels to strike a balance between meeting customer demand and minimizing carrying costs. Techniques like economic order quantity (EOQ) and just-in-time (JIT) inventory management are utilized.

5. Space Utilization:

Maximizing storage space efficiency through proper warehouse layout, shelving systems, and storage techniques. This ensures optimal use of available space and facilitates easy access to inventory items.

6. Inventory Visibility:

Ensuring visibility of inventory throughout the supply chain, from procurement to distribution. This transparency aids in accurate demand forecasting, efficient order fulfillment, and timely replenishment.

7. Inventory Security and Control:

Implementing measures to safeguard inventory against theft, damage, or unauthorized access. This includes physical security measures, such as locked storage areas, as well as digital security through access controls in inventory management systems.

Methods of Stock Keeping:

1. FIFO (First In, First Out):

In FIFO method, the oldest inventory items (first received) are used or sold first. This method ensures that perishable or time-sensitive goods are utilized before they expire, minimizing waste.

2. LIFO (Last In, First Out):

LIFO method involves using or selling the most recently acquired inventory items first. This method may be suitable for non-perishable goods or situations where recent costs better reflect current market prices.

3. ABC Analysis:

ABC analysis categorizes inventory items into three categories based on their value and usage:

• A: High-value items with low usage (typically managed closely).
• B: Moderate-value items with moderate usage.
• C: Low-value items with high usage (managed with minimal attention).

This method helps prioritize inventory management efforts and resources.

4. Just-in-Time (JIT):

JIT method aims to minimize inventory levels by receiving goods only when they are needed in the production or sales process. This reduces carrying costs and improves cash flow but requires reliable supply chains and accurate demand forecasting.

5. EOQ (Economic Order Quantity):

EOQ method determines the optimal order quantity that minimizes total inventory costs, considering factors such as ordering costs, holding costs, and demand variability. It helps balance ordering costs and carrying costs.

6. Batch Tracking:

Batch tracking involves assigning unique identifiers (batch numbers or lot numbers) to groups of similar inventory items produced or received together. It allows for traceability in case of recalls or quality issues.

7. Perpetual Inventory System:

In a perpetual inventory system, inventory levels are continuously monitored and updated in real-time through the use of inventory management software or systems. It provides accurate and up-to-date information on stock levels, aiding in decision-making.

8. RFID (Radio Frequency Identification):

RFID technology uses radio waves to track and manage inventory items tagged with RFID tags. It allows for automated and real-time tracking of inventory movements and reduces manual handling errors.

9. Cycle Counting:

Cycle counting involves regularly counting a portion of inventory items in rotation rather than conducting full physical inventory counts. It helps maintain inventory accuracy and reduces disruption to operations.