Debitoor Dictionary

Accounting terms explained in a simple way

Over 150 Articles for Founders and Small Enterpreneurs

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Stock management- What is stock management?

Definition: Stock management largely refers to when a company works to obtain and preserve a suitable assortment of goods while also keeping track of all orders, shipping and handling, and other related costs.

Primarily, stock management is about specifying the size and placement of the goods that a company has in stock. Stock management is often important for numerous departments within a facility in order to protect the planned course of production against the possibility of running out of critical materials or goods.

Competing stock requirements

Stock management also encompasses the important connections between replenishment lead time, asset management, carrying costs of stock, future stock price forecasting, physical stock, available stock space, demand forecasting and much more.

By balancing these competing requirements, a company will discover their optimal stock levels. This is a never-ending process, as the company will need to shift and react to its environment as it changes and grows.

Push and pull

To put it simply, stock management is ruled by first the customers, who pull goods out of stock, and second by the company that pushes the goods out of stock based on orders and demand.