Stock is ... Inventory accounting. Stocks of the enterprise

The stock is the form of the existence of the material flow. On the way of movement from the source of appearance to the end user, it can accumulate on any site. That is why it is common to distinguish between stocks of materials, raw materials, finished products and other.

Basic definition

It turns out that the material stocks are materials, raw materials, components, finished products, as well as other values that await personal or industrial consumption. The existence of such a good is associated with significant costs and seriously affects the performance of the enterprise. If the desired product is absent, it can cause a decline in sales, as well as consumer discontent. Due to a shortage of raw materials for production, a breakdown or a change in the production program may occur , and this often results in a shortage of finished products and additional costs.

Nuances

Badly, and in the event that there is excess stock, this too becomes a source of problems. Due to the excess of certain volumes, there is a need to use additional storage facilities, working capital, and also involves the costs of paying taxes and insurance. Products stored in a warehouse may well become obsolete, losing part of its value. For many companies, the stock is a significant part of the assets. At the same time, it is a source of costs. If you reduce inventory by several percent, you can significantly increase profits.

Features

It turns out that the content of stocks is a certain risk. If you use your own funds, it is possible that the capital is dead, and when borrowing funds, you can talk about increasing the interest expenses of the company. Another risk is associated with the possibility of theft or the transfer of production in an unfit state. If you add to this a considerable amount of investments in stocks, then a complex of these factors for any enterprise will constitute a significant part of the risk.

The extent and nature of the risk depends on how the enterprise is located in the distribution channel. For example, in wholesale trade, due to a wide range of goods, there can be a sharp increase in inventories, as well as expenses for their maintenance, which are incommensurable with the proceeds from trade. In retail, the content of stocks is associated with significant costs, which are associated with the high cost of retail space.

Addiction

The stocks of the enterprise are an important part, without which we can not do without. This is due to the functions that are assigned to them.

First of all, reserves provide geographic specialization for individual economic units. Since energy, raw materials, water and labor are needed for production, it is often located remotely from the main markets. Technological capacities that are required for the production of these components and assemblies are usually placed as close as possible to the sources of material resources in order to reduce transportation costs. So it is possible to ensure the economy of production.

At the same time, geographic isolation requires the transportation of components to the main production line . In addition, this factor creates a need for inventories required for production. Goods created in different places are collected in warehouses for the purpose of further acquisition, as well as sending to consumers. And here it is important to properly manage inventory, which will allow you to optimize everything.

The second function

Such a moment as the balancing of supply and demand is associated with the existence of a temporary gap between the consumer and production. The most obvious example is the seasonal production of products that is consumed during the year, such as juices, canned goods, and others. A reverse example can be antifreeze, the production of which is carried out year-round, and consumption is exclusively for winter time. Accounting for inventories makes it possible to ensure that production will be economical in conditions of unstable demand. The complex problem of planning is overcoming the time gap between production and consumption. When it comes to seasonality of demand, manufacturers, wholesalers and retailers of retail chains need to create commodity stocks before the seasonal demand peaks. Due to the accumulation of stocks, it is possible to eliminate the strong dependence of production and consumption on seasonal factors.

Another feature

Balancing involves investing in the formation of savings that will be used for the season in full. Inventory management in this case involves such a problem as determining the required volume to ensure maximum sales with a minimum risk of shifting balances for the next season.

Another important point is protection against uncertainty. This function is shifted to insurance or buffer stocks, and it consists in smoothing supply or demand fluctuations. Planning in this case requires the determination of the required amount of insurance savings. The need for them is associated with the uncertainty of future supplies and sales to replenish the resource base.

Insurance stock is a way of protecting against two types of uncertainty. The first assumes that demand within a single functional cycle suddenly turned out to be greater than expected. And the second type depends on the fluctuations of the actual functional cycle itself. As an example of the uncertainty of demand, the following can be cited: the consumer ordered more or less quantity of the product than planned. There is still uncertainty of the second type, which arises from delays in obtaining orders or processing them, or because of problems in transporting products.

Additional moment

Another function of reserves is the consolidation of resources, which is realized by accumulating stocks of unfinished products at the border of the production process stages, which allows to ensure the maximum efficiency of the production process in a single enterprise. Thanks to the availability of stock in advance, the manufacturer has the opportunity to send large quantities of goods to customers at the lowest tariffs.

Due to the consolidation of resources, it is possible to sell the accumulated or produced products in the required assortment. It turns out that this function is assigned to insurance of a business enterprise from uncertainty.

conclusions

The functions of the reserves are predetermining for the amount of investment in them that are required to fulfill the plans developed by the enterprise. Any specific production and distribution strategy will reduce the volume only to the level at which all four functions of the reserves will be ensured. If there are accumulations above this minimum level, then they are considered to be excessive. That is why inventory accounting at all stages of the production cycle of an enterprise of any industry is so important. Only in this case it is possible to ensure an optimal balance between the receipt of resources and the accumulation of finished goods.