A small shop, workshop or office usually handles stock the same way: someone notices that the last box of something is open, and a rushed order follows. Sometimes the item is not available for a week. Sometimes the cupboard holds three years of something nobody uses. Both cost money, and neither needs a system to fix.
This article describes a routine that fits on one page: a monthly count, a minimum level for each item and a named person who orders. It suits a company with a storeroom, a workshop, a small shop or just a cupboard of supplies that the business cannot work without.
Step 1: choose what to count
Do not start with everything. Make a list of 20 to 30 items, chosen by one of these questions:
- If we ran out, would work stop or a customer be disappointed?
- Does the supplier take more than a few days to deliver?
- Is the item expensive enough that a mistake hurts?
Cheap items with fast delivery, such as pens or cleaning cloths, can wait. You can add them later or simply buy them when you notice. Put the list in a shared spreadsheet or on paper next to the shelf: item, where it is kept, supplier, unit (box, piece, kilogram).
Step 2: count on a fixed day
Pick one day each month, for example the last Friday, and put it in the calendar. One person counts, and the same person does it each time if possible. Ten to thirty minutes is enough for a list of this size.
Write the number you actually see on the shelf, not the number you think should be there. If an item is open or partly used, count it as a rough fraction and say so. The aim is a usable number, not perfection. Over time the differences between your records and the shelf show you where things disappear or are used faster than expected. The method is known in warehouse practice as cycle counting; you are doing a very light version of it. See Cycle counting for the background.
Step 3: set a minimum level for each item
The minimum level is the number at which you order. A rough way to set it:
- Estimate how much you use in a normal week.
- Find out how many weeks the supplier takes to deliver, including your own time to place the order.
- Multiply the two, then add a small buffer, for example one extra week of use for important items.
So if you use four boxes a week, delivery takes two weeks and you want one week of buffer, the minimum level is twelve boxes. When the monthly count shows twelve or fewer, you order.
This is the basic idea behind a reorder point and a safety buffer; the terms are explained in Reorder point and Safety stock. For a small company, a rough number that you actually use beats a precise formula that nobody applies.
A problem appears if you count only once a month: an item can fall below the minimum a day after the count. For items where running out is serious, either set the minimum higher or ask whoever uses the item to tell the person who orders when the last pack is opened.
Step 4: decide how much to order
Next to the minimum, write an order quantity. Usually it is one of these:
- the amount that brings you back to a sensible maximum, for example four weeks of use
- the supplier's standard pack or the quantity that gets free delivery
Do not order more only because it is cheaper per unit, unless you are sure to use it. Money sitting on a shelf is money you cannot use elsewhere, and some items expire or become obsolete.
Step 5: name who orders
This is the step that most often fails. If everybody can order, nobody does. Write down:
- The person who orders. One name for the whole list, or one per group of items.
- The deputy. Who orders when the first person is on holiday or ill.
- The approval rule. Orders below a certain amount go ahead without asking; above it, a manager says yes.
- The record. The date of the order and the expected delivery, written next to the item.
When the delivery arrives, the person who receives it checks the quantity against the order and updates the sheet. A short note that arrived goods were wrong or late helps when you review suppliers.
Step 6: review every quarter
Every three months, spend fifteen minutes with the list. Remove items you no longer use. Raise the minimum for items that you nearly ran out of. Lower it for items that keep piling up. Check whether a supplier has changed their delivery time. A routine like this is also a natural input for a one-page monthly operations review, where "number of times we ran out" is a good figure to track.
If the list grows beyond what a sheet handles comfortably, with several locations, many suppliers or items that need tracking by batch, that is the moment to look at four signs it is time to switch from a spreadsheet to a small tool. Until then, the sheet is enough. For larger organisations with a longer chain, see logistics and supply chain visibility.
Common mistakes
- Counting everything at once. The task becomes too large and gets skipped. Start small.
- No fixed day. A count that depends on someone remembering will stop within a few months.
- Setting the minimum by feeling and never revisiting it. Demand changes; so must the number.
- No named person. Everyone assumes someone else has ordered.
- Trusting the record over the shelf. When they differ, the shelf is right; correct the record and ask why.
A first step
This week, write down the 20 items whose absence would hurt most. Next to each, write the supplier and the number you use in a normal week. Choose the counting day for next month and the name of the person who orders. That is the whole routine in its first version.
Sources
- Wikipedia, Cycle counting
- Wikipedia, Reorder point
- Wikipedia, Safety stock
- This article is a planning aid. The numbers in the examples are illustrations, not recommendations for any particular business. No client results are claimed.
