Technology & Supply Chain Relationships with Customers & Suppliers


Efficient stock control depends on three factors:

  • Accurate customer records
  • Well-managed customer information
  • Effective accounting and stock control systems.

Get all three working well together and you could move towards a just-in-time system, with huge potential cost savings and real efficiency benefits to your organisation.


The first step is to introduce or upgrade an automatic stock system. Such systems range hugely in price and sophistication, offering everything from basic functions such as invoicing, purchasing and goods-in monitoring, to more advanced capabilities such as product audit trails, batch and single item traceability, multiple product purchase and sale unit quantities, product grouping, and product usage forecasting.

Keeping less stock in-house would give you results. See if your suppliers can hold stock for you, and whether distributors are willing to monitor and replenish stocks of non-critical items without over-burdening your goods-in and stores operations.


The next step would be to integrate your stock control system with the rest of your business. Software packages now offer you the chance to integrate your accounting system with stocks functionality – controlling dispatch, invoicing, purchasing and sales through one integrated system. For example, the introduction of the web-page language XML (eXtensible Mark-up Language) means that invoices from a supplier can pass automatically through your business’s systems, picking up your company layouts, fonts and logo, as if you typed it all yourself. An XML file can also rework an invoice into a purchase ledger, with appropriate identity and security checks.


Closer collaboration with your suppliers and customers can help you manage your stock levels more effectively. Operating compatible systems will make things work more smoothly. Working more closely with your supply chain partners will naturally require mutual trust and potential investment in technology, but the benefits can have a real impact on your bottom line – and theirs.

Stocks Best Practice Implementation Plan

1 Know what you have and where

Whatever the product, technology can help you improve stock control. One of the most important recent developments in this area is RFID (Radio Frequency Identification), a development of barcode technology where identification tags can be read at distance, enabling the tracking of goods rapidly, efficiently, and automatically.

The technology is now moving out of the development stage, and certain larger businesses now insist on RFID tagging from their suppliers – especially those in the USA. The good news is that the technology is becoming cheaper as demand rises, so cost is likely to become less of an issue for most businesses.

2 Stockturn and hit rate

There is always safety in stock, even though there may be an associated cost. Stock can protect your business from short supply interruptions. So if you are aiming to cut stock levels, it’s important to make sure this doesn’t negatively affect the level of service you offer your customers.

Use a combination of stockturn and hit rate to see if you are getting the balance right.

  • Stockturn is your key stock efficiency measure. It is your total purchase bill for the year, divided by the value of all your stock at year-end.
  • Hit rate is a measure of how often you meet a request for a stock item on time.

3 Aim to stock only what you need

You should aim to stock only what you need, when you need it. By connecting your stock control, accounting, purchasing and production systems, you will be well on the way to buying only when you need to. Automated systems provide basic information such as the average lead-time and use rate of key items, as well as more advanced applications like end-to-end stock control and predictive buying.

4 Streamline

Cutting out certain processes could reduce delays and cut costs. Consider issuing orders electronically direct from your production team to the supplier, rather than having to go through a purchasing department. You could also make the move out of warehouse space by implementing just-in-time stock delivery.

You might find the following useful:

For information about integrated accounting and stock control systems, visit sites like and

Advanced stock control systems such as RFID are reviewed and assessed on sites such as and

Technology & Supply Chain Relationships with Customers & Suppliers business advice – Crown Copyright © 2004-2011
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