1. Confusing physical stock with available stock
What is on the shelf is not necessarily available. Part of it may already be reserved for orders in progress. Selling that stock a second time creates a stock-out for a customer who thought their order was covered.
2. Ordering “by feel”
A reorder point can be calculated. The most common formula: average consumption over the supplier’s lead time, plus a safety stock.
Figures given as an example. Redo the calculation when sales or lead times change.
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3. Treating all items the same way
A small share of items often accounts for most of the stock’s value. That is the principle of ABC classification: A items, high value or fast-moving, deserve close monitoring; C items can be managed more simply.
4. Letting stock sit idle
An item that has not moved in twelve months takes up space and ties up money. Identifying these dormant items lets you decide: sell them off, return them to the supplier, or stop restocking them.
5. Forgetting certain movements
Items taken out for a job site, breakages, samples, customer returns: every unrecorded movement creates a gap between theoretical stock and actual stock. The gap only shows up at the stocktake, when it is too late to trace its cause.
