An effective stock management process is one of the key components of a company’s purchasing efficiencies. Stock is large capital investment so it makes sense to manage it as well as possible.
In particular, keeping track of raw materials is essential for the smooth flow of the production process. Internal controls to prevent loss, damage and misuse of stock must be established and maintained.
Depending on the type of business, these internal controls include:
Secure the Warehouse
Locked gates and doors with only authorised entry is the first step to securing the stock.
Organise the Stock
If you can’t find it, you can’t control it! Each stock item should be numbered as well as the location that it is stored in. This facilitates quick and easy tracking in the long run.
Count all Deliveries
Do not rely on delivery dockets. Identify who is responsible for signing off on the quantity received before it is officially recorded as ‘in stock’. If there are items missing or damages, this needs to be noted immediately and appropriate action taken, (accounts department notified, goods returned, etc.) Using an automated handheld scanner is the most error-free method of stock recording.
Tag all Materials
Each item should be identified by part number and description to avoid any confusion or the wrong part being used for the wrong production.
Standardise the Picking Process
Whether it is a manual or automated procedure, when any item leaves the warehouse for use in production, servicing, or otherwise, it must be recorded. A controlled gate or door is extremely beneficial for this step.
Check the Bill of Materials (BOM)
The BOM is a list of the parts needed for production and it is used to pick materials from stock. Ensure that your BOM software is reliable as this will save messy additional requests and returns at a later date.
Conduct Spot Checks
Compare small, frequent, manual counts of the warehouse stock with the recorded amounts and investigate any errors found.
Record all Wastage
If scrap materials are thrown away without being properly recorded, the stock management and accounting systems will assume that they are still in stock and quantities and values will be inaccurate. Create a procedure to record wastage regularly.
Download our ebook to learn some of the other best practices for better stock management, involving all relevant departments in the process.
Your sales function is essential to growing your business. If you don’t get the basics right your operations team, your customers and your bank manager could have a big problem.
Have you come across any of these scenarios in your business?
- Inaccurate customer requirements and last minute changes to the specification
- Customer promises that are made but aren’t relayed to your operations team
- Hot deals that suddenly disappear off the radar
- Opportunities that aren’t really a good fit for the business
These problems can occur when your sales team doesn’t fully appreciate the complexities of your offering, how you produce it, and perhaps even your overall business goals.
This isn’t unusual given that most sales functions develop organically as the business grows. However there comes a time when a lack of leadership and structure will hold you back, and destroy your profitability.
Standardise your sales documents so all the team knows what you’re selling
Most problems and unexpected costs that arise in operations can be traced back to poor sales proposals and order documents.
If you standardise your product and service offering you can create a consistent costing process. The Sales team can follow this to capture customer needs consistently.
Creating a master product list, driven by an agreed Bill of Materials, ensures that operations know exactly what is being sold, right down to the parts and labour needed to produce or assemble a product.
This in turn means you know how much a job will cost and how much profit it will make, so you can forecast cash-flow if the jobs goes ahead.
With a clear understanding of how long things take to produce, alongside your current workload, your sales team can manage customer expectations about delivery times.
To avoid internal confusion standardise bespoke requests
Where a customer has bespoke requirements on top of the core product, creating a standard form for capturing this reduces confusion on both sides. This spec can be agreed and costed with your Operations, Design and Purchasing teams, and signed off before making promises or issuing quotations.
Key take aways to consider now
- Create a consistent costing process
- Create a master product list
- Create a Bill of Materials
- Create a form to standardise bespoke requirements
Target and qualify your sales prospects
Your targeting should be based on business growth goals – key sectors, geographies and products.
Focus on customers you can actually help, and qualify their buying intent ruthlessly. Your marketing and sales functions should be working together to identify and nurture potential customers that are a good fit for your business.
In order to fill quota some sales people will take any and all prospects that look like they might have a need that your company can fulfill. These sales are never going anywhere, a competitor has a more suitable offering, or the ‘prospect’ has no intention, or means, of buying the product.
Qualify sales prospects by determining:
- If they’re a good fit
- If they have a real need for your solution
- If they have budget available
- If the buyer has authority and/or influence to make the purchase
Manage your sales pipeline activity
Selling is a science. The actions needed to locate, qualify and nurture real potential customers can be identified.
Sales people should be focusing on building relationships with companies they can sell to and ruthlessly qualify out those that cannot or will not buy.
By looking at your sales activity trends you should be able to see how many meetings, calls and proposals are required to convert into sales.
As your business and sales team grows, it’s important to measure the activities of each individual. Make sure they’re doing the right kind of activities that generate real sales opportunities.
Elements of sales software activity
Depending on your business and customers typical sales activity can include:
As you recruit new team members they can learn the system, and focus on the right activities. Managing your sales pipeline through a configurable CRM platform becomes a process of ensuring the right quantity and type of tasks are being carried out.
Want to know how Flowlens can help you improve your business efficiency? Download our ebook on How to improve your processes and reduce waste.