This post is one in a series designed to help SME businesses benchmark their business and create a best practice business improvement plan across all of their business processes.  You can find the links to the full series here.  

image of stock controller taking stock inventory in a warehouseWhy is best practice stock control so important to a successful, profitable business?

Stock forms an important part of many business operations, as it’s; what you sell, what carries your margin and in some cases, even defines your business and its brand.

Stock forms an important part of many business operations, as it’s; what you sell, what carries your margin and in some cases, even defines your business and its brand.

Stock however, does have its dark side as well; it can cripple a business with poor management through loss or obsolescence, can drain working capital with a poor trading cycle and it can also rob profits with ill-considered logistics.

So, the question is really, how well does your Stock stack up?


How does your business measure up?

Review your business against this best practice benchmark now

BEST PRACTICE BENCHMARK: We have an effective stock management system in place. Our stock turns over consistently, we have minimal stock losses and have very low levels of obsolescence.  #Operations

Here’s a checklist to help you determine the effectiveness of your stock control practices.

Stock Selection

  • We align all of our stock purchases to our overall business strategy – ensuring the correct type and style of product.
  • Our stock selections are aligned to our defined target market/s.
  • We have evaluated our stock lines for market sale volumes and available price margin to ensure that we can gain a suitable return.
  • As part of our stock selection process, we consider “up-sell” and “cross-sell” opportunities with our existing stock lines.

Supplier Dependency

  • We have a diversified range of suppliers, with no single supplier providing more than 20% (by value) of our stock.
  • Due to our diversified supply options, we have been able to negotiate balanced/fair supply terms.
  • In the event of a supplier failing, we have already identified at least one suitable replacement supplier so our business is not put in jeopardy.

Stock Management

  • We have comprehensive stock management systems in place to monitor our stock days on hand, by product/product category.
  • Our cash cycle has been mapped and we understand the importance of our stock holding component.
  • We use stock reporting to track and monitor stock for optimal quality and ranging decisions.
  • The value of our stock holding is fully understood and we actively manage our investment for the greatest return.
  • Formal security, obsolescence and stock handling processes are in place to minimise the devaluation of our stock holding.
  • We have a close understanding of our stock logistic costs and actively work to keep them down.


  • By stock item, we undertake regular checks to ensure that our expected margin is being received.
  • We are making sufficient margins from our stock for the sustainable viability of our business.


About the SMART-Connect best practice Business Planning and Strategy Advisor

Stewart Clark

Stewart Clark

Business Consultant and Risk Advisor

Over the past 25+ years, Stewart Clark has worked with many business owners across a broad section of industries, in both small and large businesses. This work has included extensive business reviews from a financing/operational perspective, through strategy, succession, marketing, risk and more general business disciplines.

Experience has shown that it's not what you make that counts, it's how much you keep which really matters. Many businesses are not clear on these points, in that they are not in control of how much they are generating (revenue/marketing/sales), nor are they clear on what they actually keep (gross/net margins). Strong business disciplines address both of these areas.

Services provided to business include strategic planning, profit enhancement, succession planning and business structuring, marketing and sales performance, risk assessment and advisory.

There are a lot of consultants/coaches who talk the talk and help you plan your journey, but very few will develop the strategy, work with you through the trials of implementing change, and then still be around to see you celebrate your wins and achievements.


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