What is Non-Stock Inventory?
Non-stock Inventory refers to items that are not regularly stocked but are ordered as needed. These items are often special orders or infrequently used products that are not part of the regular inventory.
Characteristics and Management of Non-Stock Inventory
The characteristics and features of non-stock inventory include:
1. Special Order Items
Often ordered specifically for individual customer needs or unique projects, not part of the regular inventory line-up.
2. Irregular Demand
Non-stock items typically have unpredictable or infrequent demand, making it impractical to hold them regularly in stock.
3. Longer Lead Times
Since these items are not readily available in inventory, they often have longer lead times from order to delivery.
4. Custom or Unique Products
They often include custom-made or specialized items that are tailored to specific customer requirements.
5. Inventory Control Challenges
Managing non-stock items can be complex due to the irregularity and unpredictability of orders, requiring a different approach compared to standard inventory.
6. Higher Procurement Costs
As these items are ordered in smaller quantities and less frequently, they might incur higher per-unit costs due to lack of bulk purchasing advantages.
7. Impact on Customer Satisfaction
Timely sourcing and delivery of non-stock items can significantly impact customer satisfaction, especially when these items are critical to the customers’ needs.
Implications for Business:
- Customer Satisfaction: Helps in meeting customer needs by providing a wider range of products, albeit with longer lead times.
- Inventory Control: Requires careful management to avoid excessive ordering costs and potential waste.
Building strong relationships with suppliers to ensure quick fulfillment of non-stock items.
Analyzing historical data to predict demand for non-stock items and plan orders accordingly.
- Role in Diverse Industries:
Common in industries where custom orders are frequent, such as manufacturing, construction, and specialized retail.