Stock Control Best Practices

How much revenue is your business losing due to stock mismanagement? For UK retailers, the cost of overstocking, understocking, and product returns is estimated to run into the billions each year. It’s a staggering figure that highlights a critical vulnerability that can be found in many operations: a lack of effective stock control. But what is stock control, and what are the essential stock control best practices you should incorporate into your business?

In this guide, we’ll take a look at some of the most effective stock control methods, explain why moving from a manual stock control system to an automated one can make a huge difference, and provide actionable best practices you can implement today. Whether you’re an established omnichannel retailer or a growing business, mastering these principles will provide a solid foundation for sustainable stock success.

What is Stock Control?

Before we delve into our guide on recommended stock control methods, there’s an important question that we should first address: what exactly is stock control? We often use the phrase interchangeably with the more broad ‘stock management’, but in short, stock control is the vital process of making sure you have the right amount of stock, in the right place, at the right time.

Stock control is the hands-on discipline of managing what you physically have on your shelves and in your warehouse. And understanding why stock control is so important is the first step toward transforming your business – it’s the critical link between supply and customer demand that directly dictates your profitability, efficiency, and reputation.

Why is Stock Control Important for Your Bottom Line?

Effective stock control is more than just an operational task ticked off a list; it’s a core financial strategy that has a very real impact on the health of your business. Having a firm handle on your stock levels will provide tangible benefits that ripple through every department, from your warehouse stock controller on the floor to the accounting office.

Lets explore some of the biggest benefits of effective stock control.

Maximising Cash Flow

Every product sitting in your stockroom represents tied-up capital. While inventory is necessary to fulfil orders – especially across online channels – excess or slow-moving stock ties up cash that could be used for growth-driving activities, such as marketing, expanding product lines, or upgrading systems. Smart stock control ensures you invest only in the inventory that sells, keeping your cash flow fluid and your business agile.

Increasing Profitability

Profits can erode at both ends of the stock spectrum. Overstocking leads to costly markdowns, increased storage fees, and the risk of products becoming obsolete or perishing (dead stock). Understocking, on the other hand, leads to missed sales opportunities and frustrated customers who will gladly take their business elsewhere. But with effective retail stock management, you can find a profitable middle ground, minimising losses from waste and maximising revenue by always having those popular items available.

Improving Accuracy and Reducing Loss

A crucial aspect of profitability is maintaining an accurate, real-time view of your inventory that goes beyond just sales and purchases. This is where effective stock control proves its worth in two key areas:

• Managing Returns: When a customer returns an item, it must be processed efficiently. Is it in a saleable condition? A good system will allow you to immediately add it back to your available stock count across all channels, making it available for the next customer. If it’s damaged, it may need to be written off, but without a clear process, returned items can simply sit in limbo, representing lost sales opportunities or inaccurate stock levels.
• Handling Shrinkage: Shrinkage refers to stock lost through damage, administrative errors, or theft. If not accounted for quickly, it creates “ghost inventory” – stock your system thinks you have, but which isn’t physically available. In turn, this could lead to failed orders and customer frustration. Robust stock control, which includes regular stock checking, allows you to promptly identify and account for shrinkage, ensuring your data is always accurate and reliable.

 

Enhancing Customer Satisfaction

In today’s competitive market, nothing damages customer loyalty faster than an “out of stock” notification. Modern consumers have come to simply expect immediate availability. But when you can reliably meet that demand, you’ll quickly build trust and repeat business. With strong stock control, you can make sure your most popular items are always available, creating a seamless and satisfying customer experience that keeps them coming back.

Enabling Smarter Decisions

You can’t plan for the future if you don’t have an accurate picture of the present. Reliable, real-time data from your inventory provides the foundation you need for strategic business planning. It allows for accurate sales forecasting, informs purchasing decisions, helps identify slow-moving items before they become a problem, and gives you the hard data needed to negotiate better terms with suppliers.

Essential Stock Control Methods

There are a number of proven stock control methods you can choose from, but the key is picking the right blend for your specific business model, whether you’re focused on multi-channel retail stock management or large-scale warehouse stock management. Here’s two of our favourite methods, both of which are easily transferable to virtually all businesses that deal with stock:

Method 1: ABC Analysis

Based on the Pareto Principle (or the 80/20 rule), ABC analysis is a method of categorising inventory into three tiers to prioritise your management efforts. It acknowledges that not all stock is created equal, and some are a higher priority than others:

• A-Items: These are your most valuable products, the top 20% of items that generate roughly 80% of your revenue. They require tight, rigorous control, frequent monitoring, and detailed sales forecasting.
• B-Items: This is the middle tier of products, moderately important but not quite as critical as ‘A’ items. They need a standard level of control and regular review.
• C-Items: These could be the vast majority of your individual products, but they contribute the least to your bottom line. Management for these items can be more relaxed, with less frequent reviews and more basic re-ordering rules. For example, in a fashion boutique, A-Items might be designer coats, B-Items could be mid-range jumpers, and C-Items would be accessories like socks or belts.

By segmenting your stock, you can focus your most valuable resource – time – where it can have the greatest financial impact.

Method 2: Just-In-Time (JIT)

The JIT method involves ordering and receiving inventory only as it’s needed for production or sale, rather than holding large volumes of stock. This approach can dramatically reduce holding costs and waste. However, it’s highly dependent on a reliable and fast supply chain, as any delay from a supplier could lead to immediate stockouts. JIT is most suitable for businesses with predictable demand, strong supplier relationships, or products that are perishable or expensive to store.

The Role of Stock Checking

No matter which control methods you choose, the practice of stock checking will still be fundamental. This is the physical act of counting your inventory to ensure the numbers in your system match the numbers on your shelves.

The traditional annual stocktake is all too often a disruptive, all-hands-on-deck affair. A more modern and efficient approach is perpetual inventory or ‘cycle counting’, where small sections of stock are checked on a continuous, rotating basis. This method of stock checking can keep disruption to a minimum, identifies discrepancies faster, and maintains a much higher level of accuracy all year round.

Manual Stock Control System vs. An Automated Future

For any retailer beyond the smallest market stall, relying on a manual stock control system is a high-risk gamble. Picture the scene: a mess of spreadsheets, handwritten ledgers, and delivery notes passed from person to person. It’s easy to see how this approach is fraught with potential dangers.

A manual system like this is incredibly prone to human error – a single typo can throw off your entire stock count. Information is always out of date, as data has to be manually entered, leading to delays between a sale happening and the stock level being updated. There’s also no easy way for multiple users to access the information, and the risk of data being lost or corrupted is constant.

A simple mistake in a manual stock control system, like miscounting a delivery, can easily cascade into selling items you don’t have, damaging customer trust and creating a logistical nightmare to fix.

The Benefits of Automated Stock Control

But there is another way. A modern, automated stock control system acts as the single source of truth for your entire operation. It integrates every part of your business into one cohesive whole. The benefits are immediate and transformative:

• Real-Time Data: See accurate stock levels across all your locations – physical stores, warehouses, and online channels – at a glance.
• Automation: Set minimum stock levels and let the system automatically generate purchase orders when they are reached, eliminating guesswork.
• Reduced Human Error: Barcode scanning for goods-in, stocktakes, and at the point of sale removes the risk of manual entry mistakes.
• Powerful Reporting: Use rich, detailed analytics to accurately forecast demand, identify your best and worst sellers, and make informed business decisions.
• Seamless Integration: A true stock management system connects directly to your EPOS, e-commerce platforms, and accounting software, ensuring data flows seamlessly.

There are various stock control systems examples that perfectly highlight the effectiveness of introducing automation. A warehouse team could use handheld scanners to book in a delivery, which instantly updates the stock levels on your website. Then there’s low-stock alerts, automatically triggering a re-order report for your purchasing manager. Ultimately, automated stock control systems are all about creating an intelligent, responsive, and efficient ecosystem.

Taking Control of Your Stock – and Your Success

In the competitive UK retail market, moving from reactive stock checking to proactive, strategic stock control is no longer a luxury – it’s essential for survival and growth. The days of managing a growing business on spreadsheets are over. The accuracy, efficiency, and insight gained from a modern system provide an undeniable competitive edge. And by embracing the right methods and the right technology, you can minimise waste, maximise your capital, and help your customers order products they want, when they want them.

A modern stock control system is the most powerful tool for implementing these best practices. It’s an investment that pays for itself by saving time, eliminating costly errors, and boosting your bottom line.

Ready to see how a dedicated stock management system can revolutionise your retail operations? Contact Futura Retail Solutions today for a personalised demo and discover a purpose-built stock control solution that meets the demands of UK retailers.

Stock Control Best Practices: FAQs

What is the best method of stock control?

There isn’t a single “best” method, as the ideal approach depends entirely on your business type, products, and goals. The most effective strategy is often a blend of several stock control methods. For example, using ABC analysis to prioritise your products, applying FIFO (First-In, First-Out) principles to manage rotation of perishable stock, and implementing cycle counting for continuous stock checking.

What is the most accurate stock valuation method?

The Specific Identification Method is technically the most accurate, as it tracks the exact cost of each individual item from purchase to sale. However, this level of detail is typically only practical for high-value, unique items such as cars, art, or jewellery.

For most retailers managing large volumes of similar products, the Average Weighted Cost (AWC) method offers a more practical and widely accepted approach. It spreads the cost evenly across all identical items in stock, simplifying accounting while still providing reliable accuracy.

UK accounting standards support both methods, but for everyday retail, AWC is often the most efficient and appropriate balance between accuracy and usability.

What is the difference between stock control and stock management?

While closely related, stock control refers to the day-to-day management of physical inventory within your warehouse and stores, things like receiving, counting, and moving goods. Stock management (or inventory management) is the broader strategy that includes forecasting demand, purchasing, setting prices, and analysing sales trends over time. Effective control is the foundation of smart management.

How often should I do a stock check?

For maximum accuracy, a system of continuous ‘cycle counting’ is best practice. This involves performing small, regular stock checking of different product sections, meaning you audit your entire inventory several times a year without the disruption of a full annual stocktake. For your most valuable ‘A-Items’, checks should be more frequent.

Can a stock control system prevent all stockouts?

While no system can prevent every unforeseen event (like a major supplier delay), a modern stock control system drastically reduces the risk of stockouts. By providing real-time sales data, automating re-order points based on minimum levels, and improving forecast accuracy, it ensures you order the right products at the right time, preventing the most common causes of stockouts.