How to find the stock that is stuck in your godown

Stock on the shelf is money you already spent. When it sells, the money comes back. When it doesn’t, it just sits there, taking up space and edging closer to its expiry date, while you pay the company for the next load.

Most distributors know their top five products by heart. What they rarely know is the bottom twenty. Here is a monthly check, about twenty minutes long, that finds them.

One number: weeks of stock

Weeks of stock = stock on hand ÷ average sales per week

If you have 60 cases of a biscuit and sell 40 a week, you have 1.5 weeks of stock. If you have 45 cases of a juice and sell 5 a week, you have 9 weeks. Same godown, very different stories.

Sort everything into three groups

• Fast: a few weeks of stock or less. The risk here is running out.
• Slow: more than about 8 weeks of stock. Money is sitting still.
• Stopped: no sale at all for six weeks or more. This stock is becoming a loss.

Adjust the numbers for what you sell. For milk, “slow” is three days; for detergent, it might be three months. What matters is that you decide the line once and check against it every month.

What to do with each group

Fast: don’t run out

A shop that finds you out of its best seller tries another distributor, and may not come back. Give every fast product a low-stock level, the point at which you reorder:

Low-stock level = sales per day × days the supplier takes to deliver + a few days spare

If you sell 6 cases a day and the supplier takes 4 days, reorder when you are down to about 30 cases (24, plus a day spare).

Slow: order less, and sell harder

Cut the next order. Then put the product on your salesmen’s must-sell list for a few weeks. Our guide on selling more in the same shop explains how.

Stopped: clear it before it expires

Don’t reorder it. Offer it in a scheme, move it to a route where it sells, or ask the supplier about a return. Clearing it at what it cost you is better than writing it off later at a total loss; see damaged and expired stock.

The monthly twenty minutes

1. List every product with its stock on hand and its sales for the last four weeks.
2. Work out weeks of stock for each.
3. Mark each one fast, slow or stopped.
4. Set or check a low-stock level on every fast product.
5. Take three actions on the slow and stopped list before you place the next order.

How Mulberry Sales helps

Stock in the godown and on every van is kept up to date as bills are made, and your dashboard shows opening, closing and current stock for each day. Reports break sales down by product for any dates (Growth plan and up). Give a product a low-stock level and it is flagged when it runs low; anything with stock on hand that has not sold for a set number of weeks is listed as “not selling” in stock alerts (Business plan). See FMCG distribution software.