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Stock control

Inefficient stock management can seriously damage the profits of any new or growing business. Holding stock ties up valuable cash, and incurs costs in warehousing, personnel, transportation and insurance.

In an ideal world, every business would have no stock at all but would operate entirely on a well-tuned just-in-time system with materials and parts arriving in the order and quantities in which they are needed for retailing, or for the manufacturing or assembly process.

But since most small businesses do not have the resources to implement just-in-time, here are some suggestions for reducing stock costs:

Caution

Finally, a note of caution: although it is generally best to keep stock as low as possible to avoid tying up capital, this might not always be the case if there are really significant bulk discounts available.

If you decide to make changes to your stock levels or procedures, be sure to do so within the context of the business as a whole: never make stock decisions in isolation.

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