"I have been consistently impressed by their ability to handle our complex needs and willingness to say yes to any challenge. Most importantly, I believe in the character and work ethic of the team."
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"I have been consistently impressed by their ability to handle our complex needs and willingness to say yes to any challenge. Most importantly, I believe in the character and work ethic of the team."
Mike, Co-Founder & CEO
Stock control systems, or inventory control systems, are the backbone of any business that holds inventory. These systems are used to track, record, and manage inventory levels in warehouses or storage facilities. If you deal with inventory, it’s crucial to understand the different stock control systems to manage your stock effectively. In this blog, we’ll discuss what a stock control system is, how it works, and how you can select the best type of system for your company.
A stock control system is the process of controlling the inflow and the outflow of inventory. This system manages inventory levels, orders, and shipments to ensure the inventory contains the correct quantities of the right products. There are various types of stock control systems, each one suited to different types of business. Depending on your business, a stock control system will help you determine when to order which products and which ones to ship first.
A good stock control system, regardless of its type, uses digital tools to track incoming inventory, outgoing orders, and remaining products. Since the system tracks everything, it automates inventory management and informs you of the optimal minimum and maximum levels for each product category. This system also notifies you about which products need to be shipped first or last, and when to order new quantities of any SKU.
Stock control systems are a critical part of business operations. Regardless of size or available technology, every business uses at least one type of stock control system. It’s a way to prevent shortages and financial losses due to overstocking. Stock control systems also reduce inventory storing costs and increase operational efficiency, enabling better cash flow management. You can also understand sales trends through a robust stock control system, which will help you measure inventory turnover and provide data for forecasting.
When choosing a stock control system, we recommend considering the features below before making a decision.
Automation is a key aspect of modern stock control systems. The amount of manual work in any type of business always has a significant impact on productivity and efficiency. Therefore, the more automation a system provides, the easier it can be to manage and track inventory levels.
All stock control systems can track inventory, but a good system tracks it in real time. It automates each order and delivery, reflecting inventory fluctuations as they happen. For a business that ships multiple orders a day, this tracking helps keep inventory management cost efficient.
A stock control system with SKU-level reporting is an ideal investment for a business holding a wide range of SKUs. SKU-level reporting will keep track of inflow and outflow of each product type and help adjust inventory accordingly.
Barcode and RFID support are highly important features of stock control systems. These features enable real-time inventory tracking and SKU-level reporting by tracking SKUs as they come and go through their barcodes or RFID tags.
You want a stock control system that can be easily integrated with your e-commerce platform and with any existing technology in your warehouse. If your business requires advanced integrations, you need to avoid outdated systems.
Look for scalability when picking a stock control system. A good system should adapt to changing needs as the business, the employees, and the customer base grow. A system that doesn’t offer scalability will only work temporarily.
Analytics and reporting are essential to stock control systems, but the level of metrics and key performance indicators (KPIs) you can see and download is what makes a difference. A robust system should present a clean, clear dashboard with real-time analytics reporting and generate downloadable, customized reports to support business decision-making.
There are various stock control methods you can choose from depending on your business needs. Here’s a brief overview of six of these methods.
The economic order quantity (EOQ) model helps businesses determine the optimal inventory quantity. This method considers storage and ordering costs to calculate the quantity of products that should be ordered to maintain cost effectiveness. Here’s a simple formula to calculate the EQO:
Q = √[2(DK/H)]
where
Q is the optimal order quantity
D is the annual demand,
K is the ordering costs, and
H is the storing (holding) costs
First-in, first-out, or FIFO, is a popular inventory management method where the oldest products are sold first to avoid expiration, spoilage, and obsolescence. Inventory that’s purchased first is sold first, allowing a business to get accurate information about inventory levels. FIFO is also used for accounting purposes to calculate inventory costs.
Last-in, first-out, or LIFO, is a popular stock control system that’s the opposite of FIFO. In LIFO, the inventory purchased last is sold first. LIFO is more commonly used during inflation because businesses incur higher costs for the inventory purchased most recently. As a result, businesses benefit from lower taxes because the IRS allows them to deduct the higher costs of inventory from their taxable income.
Just-in-time, or JIT, is a stock control system in which inventory is ordered only when needed to meet customer demand. Businesses order quantities of specific SKUs whenever there’s a higher demand for them in the market. This method results in lower storage and ordering costs, as well as easier inventory management.
Vendor-managed inventory, or VMI, is a stock control system in which a supplier or a vendor manages a business's inventory. The inventory is maintained and managed at the business’s location, but is owned and overseen by the supplier. This method improves the business's supply chain efficiency and reduces holding costs.
ABC analysis is an inventory management system that assigns inventory value based on each SKU’s importance. The ABC system ranks the importance of each item in the inventory depending on demand, cost, and risk. All items are grouped into three categories: A (high-value, low quantity), B (medium-value, medium quantity), and C (low-value, high quantity). These categories help businesses determine which stock items to hold, what quantity, and when to order more.
Below are some best practices for implementing a stock control system.
Encore Fulfillment is a third-party logistics (3PL) service provider that helps small, medium, and large businesses scale with accurate fulfillment, advanced warehousing technology, and efficient inventory management. We can hold and manage your inventory in our automated warehouses and create and implement a customized stock control system. Our methods have one goal: to help our partners succeed and scale quickly with the help of our knowledge base and expertise.
Stock control systems are a crucial element of any business that has inventory and ships products. There are various stock control systems, such as EOQ, FIFO, LIFO, JIT, and ABC, but an efficient system ultimately depends on your business needs, available warehousing space, and how you forecast customer demand. With any stock control system, it’s important to analyze data and to monitor progress regularly to improve operational efficiency and scale your business. If you’re looking to start using a stock control system or to change your setup, Encore Fulfillment is here to help.
As the co-founder of Encore Fulfillment, I bring more than 14 years of experience across business strategy, technology, sales, marketing, and systems integration. My journey has been focused on building a fulfillment operation that not only meets but exceeds client expectations, through precise inventory management, streamlined operations, and a relentless focus on customer satisfaction.
From the ground up, I’ve played a key role in shaping our fulfillment division, implementing scalable processes and forward-thinking solutions that drive efficiency and deliver consistent, high-quality service. My background in pastoral ministry and theology has deeply influenced my leadership style, enhancing my ability to communicate clearly, guide teams with purpose, and build meaningful, trust-based relationships with clients and partners. At Encore Fulfillment, we don’t believe in one-size-fits-all. I’m passionate about crafting personalized logistics strategies that evolve with our customers’ needs, helping them grow confidently while we handle the complexities of order fulfillment. Whether supporting e-commerce brands or established enterprises, my goal is to ensure every partnership is rooted in integrity, transparency, and a shared commitment to success.
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