Posted in Operations and Supply Chain Terms, Total Reads: 599
Definition: Active Stock Goods
Goods that are ready for order filling at pick-up locations are called active stock. To increase efficiency, waiting time of active stock should be kept as low as possible to ensure on time delivery to the customer.
Companies must ensure that they factor in demand variability in the right way to see that most of their working capital requirements are limited to Active stock and not spilling over to slow or dead stock.
Active stock helps in prevention of stock outs. The more the active stock, the lesser will be the probability of a stock out. But, again, active stock should be in right economic quantity or else it may suggest an inefficient supply chain of the company. The goal is to have the right material at the right place at the right time of right quality in the right quantity. Higher active stock will increase your working capital requirements without generating revenues.