“How much of this do we have?” is the most common question in a factory, and the most commonly wrong answer. Not because anybody is careless — because “stock” is being used to mean at least six different things at once.
The six quantities hiding behind one number
- Available — physically present and free to use.
- Reserved — physically present, but already promised to a confirmed order.
- Allocated — issued against a specific work order, waiting to be consumed.
- Work in progress — on the shop floor, part-processed, no longer raw material and not yet finished goods.
- Finished — complete and inspected, waiting to be dispatched.
- Rejected — physically present, counted by anyone doing a stock take, and worth nothing.
A spreadsheet that shows one figure is silently adding several of these together. That is how a purchase manager concludes there is enough material, and a supervisor discovers on Monday that all of it belongs to somebody else.
The classic failure: buying material you already own
It runs like this. Production needs 2,000 kg. The system says 2,400 kg in stock, so no purchase is raised. But 1,800 kg is reserved against an order shipping next week. The shortage surfaces two days before the deadline, purchase becomes urgent, and you pay a premium rate for material you could have bought calmly a month earlier.
The fix is not discipline. It is that the planning screen should never have shown 2,400.
Where the material actually is
Alongside the state of the stock, you need its location: which warehouse, which rack, which bin — and, critically, whether it is on your premises at all. Material sitting with a job work vendor is yours, it is on your books, and it is not available. If your system cannot represent that, planning will keep counting it.
Every movement should be a transaction
The discipline that makes all of this work is boring and non-negotiable: every movement generates a ledger entry. Opening, plus purchase, plus production output, plus returns, minus sales, minus consumption, minus scrap, minus transfers, equals closing. If the closing figure is ever adjusted by hand without a reason attached, the ledger stops being evidence and becomes an opinion.
Reports that only work once the split exists
Get the states right and a set of reports becomes possible that most SMEs never see: stock ageing, dead stock, fast and slow movers, valuation by category, and shortage against confirmed orders rather than against a guess. Each of those is a decision waiting to be made — money sitting in the store, or an order about to be late.
Batch, lot and serial
If you supply an OEM, or work anywhere near auto components, you will eventually be asked to prove which batch of raw material went into a particular despatched unit. Retro-fitting traceability is close to impossible. Decide at the start which items are batch tracked and which are serialised, and record it from day one.
DigiLite separates all six quantities across every warehouse and rack, keeps a full stock ledger, and shows shortage against specific orders. See inventory and stores, or the full module list.
Curious what your real free stock is today? Book a walkthrough and we will run it against your own items.