What Is Stock Management and Why Is It Important?

Tall shelving units in a large warehouse, filled with cardboard boxes.

What is Stock Management?

Stock management is a vital element for many businesses across a wide range of sectors. In essence, stock management is all about knowing your stock levels, and how stock is ordered, stored, and tracked.

Stock is a business asset which includes raw materials, finished goods, and consumables, and can also cover items ordered, owed, leased and sold.

Stock control is the process that describes having visibility over assets – any products – that an organisation owns.

To put it another way, stock control helps you see exactly what stock you hold and where it is, as well as the value of it.

Stock management is a tool that can help answer questions like:

  • Are you stocking the right items that customers want?
  • Do you have enough products in stock to meet demand?
  • Is overstocking an issue?
  • Are there obsolete products taking up storage space?
  • What are your best selling products, and are any creating losses?
  • Which products are due to expire soon?

Being unsure of the answers to these questions can result in wastage, profit losses, and money being tied up in stock. With stock management, the answers to these questions are at your fingertips, allowing you to be more agile, efficient, productive, and profitable.

What is the purpose of stock control?

The most obvious purpose for stock control is to be able to meet customers’ demand without running out of stock or causing delays in delivery times. This may need to take into account seasonal variations, peaks in demand, or any unforeseen circumstances which might disrupt the supply chain and impact customer service.

Another purpose of stock control is to ensure that the costs of holding or storing stock are minimised so that you don’t waste money or space storing stock you don’t need.

Why is good stock control important?

  • Improves liquidity & cashflow

Poor stock management can result in liquidity issues for your business.  Good stock control improves the cashflow of a business and can help you release cash when you need it. Having a good understanding of what stock your business holds means that you can quickly know the value of the stock held, and also the value of your business.

  • Better decision making

When you have good visibility over the stock that you own, you can better serve your customers. Good stock management also enables you to make better decisions about the business, be more efficient, and be able to run your business more profitably. In turn, this can also support your business to grow and scale.

Stock control allows you to see which stock turns over quickly, and therefore needs to be ordered more frequently, and which stock doesn’t, so you don’t tie up resources in holding stock that doesn’t sell well. As a result, it allows you to make better decisions to better serve your customers, and be more agile in delivering your products and customer service.

  • Better warehouse management

Good stock control also you to be more organised in terms of storage. By organising your warehouse around the movement of your stock, you can better manage the stock and the space available. Storing best-selling or most used products close to each other in the warehouse makes it much easier and quicker to find them.

  • Keep track of wastage

Managing stock is also important in order to keep track of wastage, loss and theft, meaning its harder to misplace stock. What’s more, when a warehouse is well organized, it becomes much more of a deterrent against theft, so it is more likely to reduce incidences of theft.

  • Supports selling on multiple platforms

If you sell, supply or distribute products over multiple platforms, good stock control becomes critical in order to avoid running out of stock. It also makes light work of what is an impossible task to accurately do manually. A good stock management system can also make processing returns and refunds much easier should that be required.

  • Supports growth of the business

Lastly, if you’re looking to grow your business, or add new stock lines, then having a good stock management system is indispensable to make it easier to manage growth.

How to manage stock control

There are various approaches to stock management, but basically, in order to have a good system for stock management, you need to know how much stock you hold, when you’ll run out, and when you need to reorder stock. This ensures that the appropriate amount of cash is being used on stock – not too much, and not too little.

This does two things: save you money, and help you make better business decisions.

Some businesses still maintain a manual system, however this can be a time consuming and inaccurate method to manage inventory.

A cloud-based or digital inventory management software is preferable as it can provide much more accurate, real-time data, and some useful analytics to help save time and increase profits.

If you choose a software package like StockAssist which can connect to your POS or client management system, this monitors and keeps track of inventory in real-time, alerts you to low stock notifications, and provides daily reports to support the day to day running of your business.


That’s about the long and short of it when it comes to defining what is stock control and why it’s important.

Undeniably, good inventory management can really contribute to the success of your business. Stock control is important in any business which handles stock, or products, whether you have a retail business, a warehouse, or even a hospital.

Stock is central to a business making money, so any business which handles stock, goods or products needs to make stock management a top business priority.

For more about the benefits to your business of implementing a stock management system, check out this article next.


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