Inventory and stock control
Stock control is the work of knowing what you hold, where it is and how much of it you will need. The terms below describe three layers of that work: the identity of the goods (a SKU, a lot or serial number, an expiry date), the rules that decide which stock leaves first (FIFO, FEFO) and the checks that keep the records true (stock takes and cycle counts).
On top of those sit the planning terms: how much safety stock to hold against uncertainty, at what level to reorder, and what to do with stock that no longer sells (dead stock) or cannot be delivered yet (a backorder). Figures that show how well this works, such as turnover and accuracy, are grouped under Metrics and KPIs.
Terms in this topic
ABC analysis
ABC analysis explained simply: ranking products by how much they matter and splitting them into A, B and C groups. How to use it, with an example.
Backorder
Backorder explained simply: an order for something out of stock, accepted now and sent when it's back. When it helps, when it hurts, with an example.
Batch number
Batch number explained simply: the code that tells one delivery of a product from another, so a problem touches only the boxes it should.
Cycle count — cycle counting
Cycle count explained simply: counting a few locations every day or week instead of everything once a year. A simple plan, with an example.
Dead stock
Dead stock explained simply: items that haven't sold for a long time and probably won't. How to spot it and what to do with it, with an example.
Expiry date
Expiry date explained simply: best before versus use by, what each means in a warehouse, and why the date decides what ships first.
FEFO — First Expired, First Out
FEFO explained simply: ship the stock that expires first, not the stock that arrived first. Less waste and a faster recall, with an example.
FIFO — First In, First Out
FIFO explained simply: your oldest stock goes out first. When the rule works, when it doesn't, and how it differs from FEFO. With an example.
Lot number
Also called a batch number: the code that tells one delivery of a product from another. The short answer; the full explanation is under batch number.
Reorder point — reorder level
Reorder point explained simply: the stock level at which you place the next order, so the delivery arrives before the shelf is empty. With a worked example.
Safety stock
Safety stock explained simply: the cushion of extra stock that covers a busy week or a late delivery. A simple way to size it, with a worked example.
Serial number
Serial number explained simply: the code that belongs to one single item, so you can trace that exact unit for a repair, warranty or recall.
SKU — Stock Keeping Unit
SKU explained simply: the code you give each product, size and colour so stock, prices and shelf locations can be tracked. With an example.
Stock control
Stock control explained simply: knowing what you have, where it is and when to reorder, so you neither run out nor tie up cash. With an example.
Stock take
Stock take explained simply: counting what is physically on your shelves and comparing it with your records, how often to do it, with an example.
Also relevant to this topic
Days of inventory — stock cover
Days of inventory explained simply: how many days your stock would last at today's sales rate. Two versions, and a worked example.
Fill rate
Fill rate explained simply: the four versions that give four different answers, how to work it out, and what to do when two reports disagree.
GMROI
GMROI explained simply: how gross margin return on inventory investment settles the argument between a fat slow margin and a thin fast one.
IMS — Inventory Management System
IMS (Inventory Management System) definition: software that tracks stock levels, movements and valuation. A WMS directs the work of moving that stock.
Inventory carrying cost
Inventory carrying cost explained simply: the five things that belong in the sum, how to work it out as a percentage
Inventory turnover
Inventory turnover explained simply: how many times a year you sell through your stock, how to work it out and what a low number tells you.
Kitting
Kitting explained simply: putting several products together into one ready-to-sell set. How to count the stock, and when it pays off, with an example.
Lead time
Lead time explained simply: the time from placing a supplier order to having the goods ready to sell. Why to measure the real figure, with an example.
Returns processing
Returns processing explained simply: logging a returned item, checking it and deciding what happens next. Why speed matters, with an example.
RFID — radio-frequency identification
RFID explained simply: a small tag answers a radio signal with its code, so goods can be read without seeing them. When it pays off, with an example.
Sell-through rate
Sell-through rate explained simply: how to work it out, why a figure without a date attached is meaningless, and why 100 per cent means you under-bought.
Service level
Service level explained simply: why it is a dial rather than a measurement, how it sets your safety stock
Shrinkage
Shrinkage explained simply: how to work it out, why paperwork rather than theft is usually the biggest cause, and how to find out which it is.
Space utilisation
Space utilisation explained simply: positions versus cubic fill, how to work both out, and why a figure near 100 per cent is a warning rather than a win.
Stock accuracy — inventory record accuracy
Stock accuracy explained simply: how often the number in your system matches the number on the shelf. How to measure it, with a worked example.
Stockout rate
Stockout rate explained simply: why counting empty bins and counting lost demand give wildly different answers, how to work both out, and which one to act on.
Other topics
- Inbound: receiving and putawayFrom dock to shelf: receiving, putaway, slotting and cross-docking.9 terms
- Outbound: picking, packing and shippingFrom order to carrier: picking methods, packing, cut-off times, despatch.27 terms
- Warehouse automation (MHE)Machines that store, move and sort goods, and the technologies that guide the work.19 terms
- Systems and integrationWMS, OMS, WCS, WES, EDI and how warehouse software connects.10 terms
- Retail and supply-chain standardsGS1 identifiers, barcodes and the messages trading partners exchange.9 terms
- Metrics and KPIsThe numbers that show how stock and warehouse work are performing.25 terms
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Two questions about your own operation
How many of your articles sit in a pick location they empty less than once a month?
Part one: Laying out a warehouse does not start with the racking
After your last integration, how many systems hold a stock quantity for the same item? Name them.