Companies with stock struggle daily with appropriate stock levels – they need to ensure enough items are in stock to satisfy the customers and on the other hand make sure any article isn’t just piling up and ageing in the warehouse. The stock levels need to be optimized, but how to best achieve this?

There are two things we have found to work best in practice – regular review and responsibility.

What we mean with ‘regular review’ is really a weekly or a monthly (essentially as often as needed and reasonable in your industry) meeting where the stock levels are compared with sales, new minimum stock levels determined, action plans decided for slow moving goods etc. With this the stock levels are under a constant monitoring and provided that warehouse responsible personnel as well as sales and management team is involved, proper actions are decided and taken.

Under ‘responsibility’ we are talking about making people responsible for their stock levels. This works best in a company where there are essentially product managers, who have their own area of expertise and group of goods they are in charge of ordering, monitoring sales for etc. You can determine the preferred or needed stock levels for each group or subgroup and when those goals are achieved, the manager get extra bonus. So essentially you make their monthly pay dependable on how well they are able to manage the stock levels. Obviously there should be exceptions like force majeure, but that’s the general idea however.

It’s like in everything else – make people responsible and make sure a good group of people is regularly checking up on things – works wonders!