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7 Stock Control Methodologies Manufacturers Should Practice

7 Stock Control Methodologies Manufacturers Should Practice

“The most dangerous kind of waste is the waste we do not recognize.”
– Shigeo Shingo, leading expert (Toyota Production System)

In this dynamic manufacturing world, customers’ demand is unpredictable and inconsistent. Manufacturers struggle a lot while managing their stock, inventory operations and transactions. When we talk about stock control, it is the ultimate process of making a minimal investment in the inventory while addressing the customers’ demand on time.

In simple words, Stock control, or inventory control, is used to show how much stock you have at any one time, and how you keep track of it. It applies to every item you use to produce a product or service, from raw materials to finished goods. It covers stock at every stage of the production process, from purchase and delivery to using and re-ordering the stock.

Items in stock can be broadly classified into four categories:

stock control software

Stock control methodology for one category may not be suitable for another category. You may choose one method or a mixture of two or more if you have various types of stock.

As a result, different stock control methodologies are adopted by businesses as per their specific needs. In addition to leveraging the most suitable stock control methodology, as a manufacturer, you should also seek a sophisticated software solution that can help your company perform better and more efficiently. Without a stock control software, manufacturers may face stock-outs, spoilage, obsolescence and other adverse effects.

Therefore, to ensure stock is maintained accurately, you should –

  • Label every material you procure
  • Use the latest technology like – RFID tag, barcode, and QR code – for labeling
  • Place the fast-moving products in an easy to access section or bin
  • Minimize unauthorized and unnecessary personnel in the warehouse
  • Identify minimum stock level (also called Re-order Level)
  • Regularly review your stock
  • Use a powerful inventory management software

Investing in an ideal inventory management software solution can do wonders for your business. ERP software is considered as one of the most reliable and powerful solutions (especially for the manufacturing sector).

Enterprise Resource Planning (ERP) is a suite of business management tools that manages and integrates activities such as financials, accounts, sales, procurement, inventory, reporting, and human resource activities. An effective ERP software manages all the stock control methodologies efficiently and lets you create a streamlined inventory to further encourage increased bottom-line.

To ensure that operations are done in a streamlined manner, manufacturers opt for the most suitable methodology that can help them nurture lean manufacturing while reducing waste and increase the ROI.

These are some of the most commonly used stock control methodologies with a quick overview of each:

stock control methodologies

1. Just-in-time

Just-in-time production or just-in-time manufacturing is a stock control method that is primarily focused on reducing the production flow times and response times from suppliers and to customers. Under JIT, manufacturers order inventory when it is needed so that carrying and storage cost is reduced. This approach allows you to deliver the accurate amount of quantities required to complete current production. Manufacturers order stock a few days in advance before selling it. However, this can be a dicey game if the suppliers are not trustworthy and are prone to delay product delivery.

2. FIFO (First-in First-out)

FIFO is a default method to control stock. It simply means those items that are received first ought to be shipped first. It ensures that perishable stock is used effectively. However, in discrete manufacturing, we rarely work with perishable goods. But, FIFO is considered apt for discrete manufacturing, to avoid obsolescence of products.

3. ABC Control

Sometimes known as selective inventory control method, ABC control analysis classifies a wide range of inventory items such as manufactured goods, spare parts, unfinished goods or finished goods into three categories – A, B and C.

A-level products are critically important and are usually included in the top 20% of the products that contribute approx. 80% of sales.

B-level products, less in comparison with the A-level products, and

C-level products contribute the least to the company’s bottom line.

4. Two-bin inventory control system

As the name suggests, two bin inventory system is divided into two bins where the first bin holds the majority of stock and is used to deliver goods. When this bin is stocked completely, the remaining stock is kept in the latter bin. Now, the second bin is used to fulfill orders until new stock arrives. In other words, the first bin has the working capital and the second bin is used in case of fallback. Typically used for small or low-valued items, a two-bin inventory control system prevents spoilage against the products.

5. Three-bin system

It is an extended version of the two-bin system method that stores the running stock in the first two bins and keeps the rest of it as a reserve in the third bin. To encourage lean manufacturing, manufacturers ensure not to ask for more items from the supplier until the first bin has been emptied. The time when items from the first bin are finished, it is replaced with the stock from the second bin.

6. Set the stock level

To avoid overstocking or stock-out, it is always better to set a safety stock level to have a strong backup for every item. It is always good to be prepared for the worst and anticipate for the best. To manage optimum stock, it is always a wise decision to set the lower and upper inventory levels, so that, when the inventory runs down to the minimum level, you can refill the stock and bring it to the highest level. As a manufacturer, you can set the minimum and maximum inventory levels as per the specifications of the items and their demand.

7. Order-cycling system

How convenient will it be when the software automatically checks the inventory at regular intervals of time?

Economic Order Quantity (EOQ) a standard formula used to arrive at a balance between holding too much or too little stock. It’s quite a complex calculation, so you may find it easier to use a stock control software.

OptiProERP is a reliable software solution that monitors and checks the inventory for you. It automatically reorders the product, if there are not enough items in the inventory. Say after every 30 days (for example), the software can check the number of stocked items for you and ensure that there is sufficient stock until the next time it is being delivered or used.


“Out of clutter, find simplicity. From discord, find harmony. In the middle of difficulty lies opportunity.” – Albert Einstein

Stock management methodologies are used to enhance planning, transparency, and coordination between the warehouse personnel. These methodologies facilitate automation and allow the businesses to meet customer expectations by delivering precise material, on schedule. Therefore, it is always advised to select suitable ERP software for stock control, which can enhance planning functions and promote proper coordination.

OptiProERP offers a streamlined solution to your total business needs by providing inventory information quickly, efficiently, and accurately. With a robust manufacturing ERP software for stock control, you gain the insight needed to make better timelier business decisions. To know more about OptiProERP, get in touch with us at info@optiproerp.com.