{"id":1180,"date":"2021-02-22T14:04:13","date_gmt":"2021-02-22T14:04:13","guid":{"rendered":"https:\/\/www.shipbob.com\/uk\/blog\/stock-control\/"},"modified":"2025-12-24T19:47:55","modified_gmt":"2025-12-24T19:47:55","slug":"stock-control","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/uk\/blog\/stock-control\/","title":{"rendered":"What is Stock Control and How to Improve It?"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

What is stock control?<\/a><\/p>\n\n\n\n

What are the different stock controlling methods?<\/a><\/p>\n\n\n\n

How to improve stock control for your ecommerce business?<\/a><\/p>\n\n\n\n

What to look for in a stock control system?<\/a><\/p>\n\n\n\n

How to optimise stock control with ShipBob\u2019s inventory management software<\/a><\/p>\n\n\n\n

Improve inventory management with ShipBob’s WMS<\/a><\/p>\n\n\n\n

Conclusion<\/a><\/p>\n\n\n\n

Stock control FAQs<\/a><\/p>\n<\/div>\n\n\n\n

It can be tempting to fill a warehouse with as much stock as there is space to ensure you meet customer demand. But it goes without saying that taking the easy route is not always the most efficient and cost-effective. <\/span><\/p>\n\n\n\n

Having an optimal amount of stock<\/a> on hand can be challenging, especially if you have a lot to keep track of. And stock shouldn\u2019t just sit still \u2014 it\u2019s constantly moving throughout the retail supply chain<\/a>.  <\/span><\/p>\n\n\n\n

Fortunately, there are several ways to make informed decisions on controlling stock to better manage your <\/span>ecommerce supply chain<\/span><\/a> and continuously meet demand.  <\/span><\/p>\n\n\n\n

In this article, you will learn the importance of stock control, different methods that are common in ecommerce, and tips on how to better control stock levels.    <\/span><\/p>\n\n\n\n

What is stock control?<\/h2>\n\n\n\n

Stock control, also known as <\/span>inventory control<\/span><\/a>, is the process of optimising stock levels in a warehouse(s) to stabilize inventory storage<\/a> costs while maintaining enough stock to meet customer demand. <\/span><\/p>\n\n\n\n

If done right, proper stock control can optimise <\/span>logistics costs<\/span><\/a> while ensuring you have just enough stock stored at all times. In order to control stock, you will need access to tools and data to make better predictions on supply and demand. <\/span><\/p>\n\n\n\n

What are the different stock controlling methods?<\/h2>\n\n\n\n

Though it is impossible to accurately predict future demand, there are common methods you can use to help make better predictions on how much stock to have on hand and when the right time is to reorder. These methods are designed to optimise stock levels, improve <\/span>inventory accuracy<\/span><\/a>, and provide flexibility.<\/span><\/p>\n\n\n\n

Here are some of the most common stock controlling methods used in ecommerce:<\/span><\/p>\n\n\n\n

Economic order quantity (EOQ)<\/h3>\n\n\n\n

The <\/span>economic order quantity (EOQ)<\/span><\/a> method is designed to find the optimal order quantity to get from your manufacturer in order to minimise costs and optimise warehousing<\/a> space. <\/span><\/p>\n\n\n\n

Also referred to as \u201coptimum lot size,\u201d this method can help you make better decisions on how to avoid stockouts<\/a>, how much <\/span>safety stock<\/span><\/a> to have on hand, and when it makes the most sense to order more inventory.<\/span><\/p>\n\n\n\n

The EOQ calculation is based on the following three variables: <\/span>holdings costs<\/span><\/a>, annual demand, and order cost. To give it a test run, try using our <\/span>simple EOQ calculator<\/span><\/a>. <\/span><\/p>\n\n\n\n

Vendor-managed inventory (VMI)<\/h3>\n\n\n\n

The VMI method consists of delegating the process of ordering and restocking inventory<\/a> to a third party. Managing and owning <\/span>ecommerce inventory<\/span><\/a> and the associated risks in managing it all are taken care of by the vendor. <\/span><\/p>\n\n\n\n

By using this method, you pay for the stock only after it has been sold, while unsold stock is returned to the vendor. This allows businesses to worry less about controlling inventory by having it be handled by someone else. <\/span><\/p>\n\n\n\n

Just-in-time (JIT)<\/h3>\n\n\n\n

The <\/span>JIT inventory method<\/span><\/a> refers to ordering as much stock required to meet customer demand, but it also requires the ability to order quickly soon after to meet the next batch of orders. <\/span><\/p>\n\n\n\n

This stock control method is designed specifically to reduce inventory carrying costs<\/a>, increase efficiency, and decrease waste by only purchasing stock that\u2019s sure to sell sooner than later. <\/span><\/p>\n\n\n\n

Although this method comes with several benefits, there are some big downfalls. In order to implement the JIT method, ecommerce business must be able to accurately forecast demand, as well as have the ability to access real-time stock levels, or risk a high volume of stockouts.<\/p>\n\n\n\n

FIFO (first in, first out)<\/h3>\n\n\n\n

The FIFO method requires the first batch of inventory that arrived in the warehouse to be sold first and shipped out first. This makes it easy to calculate costs and value of inventory despite any changes in supplier pricing. <\/span><\/p>\n\n\n\n

Using this method, batches with the oldest manufacturing or receiving date will be picked and sold first. <\/span><\/p>\n\n\n\n

By using FIFO, any inventory left during the end of the financial year does not affect cost of goods sold (COGS)<\/a>, but it can cause some inaccuracies, which can impact inventory accounting<\/a>. It also does not offer any tax advantages. <\/span><\/p>\n\n\n\n

How to improve stock control for your ecommerce business?<\/h2>\n\n\n\n

Order too much stock and you end up overpaying for warehouse space, and worse \u2014 accumulating <\/span>dead stock<\/span><\/a> (i.e., inventory that becomes unsellable over time). <\/span><\/p>\n\n\n\n

But not ordering enough stock can cause items to be out of stock, can lead to <\/span>backorders<\/span><\/a>, and cause a decline in customer satisfaction. <\/span><\/p>\n\n\n\n

Obviously, each scenario is less than ideal. Therefore, exercising better stock control is the best way to help your business stay afloat. Here are some best practices to help you improve and optimise stock control for your ecommerce business. <\/span><\/p>\n\n\n\n

Understand your stock levels<\/h3>\n\n\n\n

To better control stock, you need to pay close attention to stock trends over time. Having a better sense of which items are slow-moving versus fast-moving and replaced in a specific time period can help you make better decisions on when to restock. <\/span><\/p>\n\n\n\n

The inventory turnover ratio is a great tool to help you determine the best time to order new stock and at what quantity per SKU<\/a>. The <\/span>inventory turnover ratio<\/span><\/a> formula is simple: <\/span><\/p>\n\n\n\n

\n

Inventory Turnover = COGS \/ Average Inventory Value<\/p>\n<\/blockquote>\n\n\n\n

To calculate, you will first need to identify COGS and your average inventory value (<\/span>beginning inventory<\/span><\/a> + <\/span>ending inventory<\/span><\/a> \/ 2). Once you have those numbers, you can easily calculate inventory turnover rate using our <\/span>inventory turnover ratio<\/span><\/a> calculator. <\/span><\/p>\n\n\n\n

Determine how much to reorder<\/h3>\n\n\n\n

Once you have a better sense of stock trends, you will then have to figure out how much to reorder from your supplier or manufacturer. Before you submit an inventory replenishment<\/a> purchase order, calculating the reorder quantity can help you decide on the optimal amount to reorder.<\/span><\/p>\n\n\n\n

The reorder quantity formula is calculated by multiplying average daily units sold by the average lead time:<\/span><\/p>\n\n\n\n

\n

Optimal Reorder Quantity for a SKU = Avg. Daily Units Sold x Avg. Lead Time<\/p>\n<\/blockquote>\n\n\n\n

If you see your order volume start to increase, it\u2019s important to calculate reorder quantity often as sales trends can change quickly.<\/p>\n\n\n\n

Find opportunities to optimise your supply chain<\/h3>\n\n\n\n

Controlling stock is just one aspect of supply chain planning<\/a>. To manage logistics costs and efficiency, it\u2019s always important to seek opportunities to optimise your supply chain<\/a>. <\/span><\/p>\n\n\n\n

One of the best ways to create an efficient supply chain<\/a> is to implement technology and automation tools. <\/span><\/p>\n\n\n\n

Many direct-to-consumer (DTC) brands<\/a> invest in an <\/span>inventory management system<\/span><\/a> to access data and analytics that help:<\/span><\/p>\n\n\n\n