Stock

Stock is the goods or materials a business holds for use, sale or distribution. Anything a business keeps in order to make something or sell it counts. In a small print shop, the plain T-shirts stacked in the back room are stock, and so are the printed tops on the rail ready to sell.

Stock comes in three forms:

• Raw materials and components – inputs not yet used, such as plain T-shirts, ink or timber. Components are parts bought in ready to fit, like the wheels for a bicycle.
• Work in progress – items partway through production, such as a half-built bookcase or a T-shirt that has been printed but not yet bagged and labelled.
• Finished goods – products that are complete and waiting to be sold or delivered to a customer.

Equipment used again and again, such as the print shop's presses or its delivery van, is not stock: it is not bought to be used up or sold on.

Holding enough stock

Enough stock means you can make and sell what customers want without waiting for a delivery. If someone orders 20 printed hoodies and the plain hoodies are already in the stockroom, you finish the job on time and the customer comes back. Too little stock causes stockouts – moments when a product has run out. That leads to lost sales, because the customer simply buys from a rival, and to production delays, because workers stand idle waiting for materials. Customers who leave disappointed may never return, which damages your reputation.

Holding too much stock

Too much stock ties up cash. Money sitting in boxes on a shelf cannot pay wages, bills or promotion. It also raises storage, insurance and handling costs: bigger premises, higher cover against fire or theft, and more staff time spent moving and counting goods. Extra stock can be damaged in store, and it can become obsolete – out of date and unsellable. A shop left with 500 phone cases for a handset that has just been replaced must discount them heavily, so it may never sell them at full price.