Keeping stock – how to help ensure you never run out


Never-ending supplies are the subject of much fiction. Think: Willy Wonka and the Chocolate Factory, that iconic 1990s Tim Tam advertisement or children’s classic The Magic Pudding. But, as with most things in life, reality bites.

With that in mind, let’s look at some practical tips to help ensure that your inventory never runs out.

Why having the right stock level matters

Whatever you’re selling, it’s crucial to know how much stock you have. This is otherwise known as inventory control. The right strategy helps to ensure that you have enough inventory to meet consumer demand. This means considering:

  • The storage space available.
  • Consumer trends and purchasing habits, such as seasonal trends.
  • Stock shelf life, depending on the nature of the stock.
  • Your minimum stock levels.

If your stock levels are too low, you risk disappointing customers, losing out on sales and damaging your profit margin.

On the other hand, with too much stock, you might end up losing money through selling items at heavily discounted prices.

Here are some tips to help strike the right balance between too much, and too little.

Import risks

Importing your goods from overseas always carries risks, but there are ways you can mitigate these:

  • Have a contingency plan in case a supplier falls through.
  • Make sure a free trade agreement exists between Australia and the overseas territory so that goods aren’t delayed upon arrival.
  • Choose a relatively close market, such as the Asia Pacific, to minimise shipping delays. This is especially important if you sell perishable goods that may expire before arrival.

“Various business insurance solutions can help maintain your business’s income if you cannot trade due to an insured event such as fire, flood or theft”

Stock tracking

Tracking your stock levels frequently is essential. Here are a few steps you should be considering:

  • Software is helpful for streamlining back-end operations and order fulfilment. Streamlining helps you spot stock shortages, particularly for popular items, before they become problematic.
  • Set up a minimum stock level so you know exactly when to reorder.
  • Invest in an inventory management program which automatically adjusts stock levels after every sale and flags up low stock issues.
  • Understand your product lead time – that is how long it takes for items to reach your warehouse after you place the order. It’s worth negotiating for shorter lead times where possible to reduce the inventory you hold in your warehouse.


Do your market research, particularly if your goods are susceptible to seasonal fluctuations.

Use demand forecasting, which involves checking seasonal variations and historical data to decide on minimum stock levels for any given period.

And if it’s a short season – for example, Valentine’s Day or Easter – have products delivered in advance. Many suppliers offer volume discounts.

Don’t get caught with too much stock

You never want to end up with far more stock than you need. Why? Because storing stock costs between 10% and 30% of the stock’s value, based on factors such as storage, insurance and loss prevention.

Holding too much stock affects your bottom line and costs you money, so it’s crucial to continually assess your stock levels against anticipated demand.

So how do you avoid having too much stock? For starters, don’t let volume discounts with suppliers drive your purchasing decisions unless you know it’s an item you’ll sell in large volumes.

You can also review your sales policy to encourage higher goods turnover. This could mean selling either unpopular items at discounted prices faster or promoting slow-moving items.

Finally, order smaller volumes at frequent intervals, so you’re never overwhelmed with stock.

The backup plan

There’s only so much careful planning and inventory forecasting you can do to help ensure your stock supplies are just right – some things are out of your control.

If you’re importing goods, you’re considered the manufacturer and may be liable for claims arising from defective stock. Additionally, you may need marine insurance yourself or to ensure your goods are covered by marine insurance through your supply chain.

Various business insurance solutions can help maintain your business’s income if you cannot trade due to an insured event such as fire, flood or theft.

Important disclaimer – Steadfast Group Limited ABN 98 073 659 677, its subsidiaries and its associates.

The views expressed are those of the author only and do not necessarily reflect those of Steadfast.

This magazine provides information rather than financial product or other advice. The content of this magazine, including any information contained on it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.  

Information is current as at the date articles are written as specified within them but is subject to change. Steadfast, its subsidiaries and its associates make no representation as to the accuracy or completeness of the information. Various third parties, including Know Risk, have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Steadfast Group Limited.


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