Explain two different ways of managing stock with reference to records and stocktaking
1. Just-In-Time (JIT) inventory management:
- Just-In-Time is a method of managing inventory that involves keeping only enough stock on hand to meet immediate demand. This means that stock levels are kept at a minimum, which can help reduce holding and storage costs.
- Records are crucial in JIT inventory management, as accurate and up-to-date records of inventory levels and demand trends are needed to ensure that stock is replenished in a timely manner. This requires frequent monitoring and analysis of inventory records to determine when to order more stock.
- Stocktaking in a JIT system is typically done more frequently, as it is important to regularly check inventory levels to maintain the delicate balance of having just enough stock on hand. This involves physically counting and recording the quantity of each item in stock to compare with the records and identify any discrepancies.
2. FIFO (First-In-First-Out) inventory management:
- FIFO is a method of managing stock where the oldest stock is used or sold first, ensuring that the stock with the shortest shelf life is consumed before newer stock. This helps prevent spoilage or obsolescence of goods.
- Records in a FIFO system are used to keep track of the purchase date and quantity of each item in stock. This allows for accurate tracking of the order in which stock was received, making it easier to identify which items should be used or sold first.
- Stocktaking in a FIFO system may involve organizing and physically counting inventory in a way that reflects the order in which items were received. This can help ensure that stock levels are accurate and that older stock is being used before newer stock.