Page 1 - SCWS Module 1 Lesson 1.docx

SCWS Mod 1 Lesson 1

1.1 What is stock and why is it important?

Stock and inventory both refer to the same thing.

Why do businesses that are concerned with profit exist? For one reason only – to make money

As a person employed to manage and control the stock of a company, it would be part of your
responsibility to ensure that you do as much as possible to make sure that the company you work for
remains in a profitable position, i.e. The company generates more money (income) than it spends

Understanding what stocks / Inventory you have, when that stock is coming in and going out, and
where it is in your warehouse, can help to lower costs, speed up fulfilment, and prevent fraud. Your
company will rely on a good inventory control system to accurately determine the amount of
investment that is tied up in inventory, a current asset on the balance sheet – an important part of
the company’s financial reporting.

Inventory control is also important for maintaining the right balance of
stock in your warehouses. It will help you get a better, more real-time
understanding of what’s selling and what isn’t. You don’t want to lose
a sale because you didn’t have enough inventory to fill a sales order.
Constant inventory shortages (resulting in frequent backorders, etc.)
can drive customers to other suppliers entirely. The bottom line?
When you have control over your inventory, you’re able to provide better customer service

You also don’t want to have excess inventory taking up space in your warehouses unnecessarily. Too
Property of Supply Chain Smart
much inventory can trigger profit losses––whether a product expires, gets damaged, or goes out of
season. Key to proper inventory control is a deeper understanding of customer demand for your
products. So how can you achieve that?

This course will help you to understand your responsibilities and increase productivity.

Definition: Inventory

Inventory is defined as:

1) Those stocks or items used to support production (raw materials and
work-in-process items), supporting activities (maintenance, repair,
and operating supplies), and customer service (finished goods and
spare parts). Demand for inventory may be dependent or independent.
Inventory functions are anticipation, hedge, cycle (lot size), fluctuation
(safety, buffer, or reserve), transportation (pipeline), and service parts
2) All the money currently tied up in the system. As used in theory of
constraints, inventory refers to the equipment, fixtures, buildings, and
so forth that the system owns— as well as inventory in the forms of
raw materials, work-in-process, and finished goods

- APICS Dictionary, version 15