Why Suppliers and Stock Deserve Your Attention

For most small businesses, stock is one of the biggest items on the balance sheet and one of the easiest places to lose money without noticing. Hold too much and your cash sits on a shelf gathering dust, tying up money you could spend on marketing, staff or new equipment. Hold too little and you turn away orders, frustrate loyal customers and hand business to a competitor down the road.

Suppliers sit right at the centre of that balancing act. Their reliability — or lack of it — dictates how much buffer stock you need to carry. A supplier who delivers on time, every time, lets you run lean. A supplier who is vague about lead times forces you to stockpile "just in case", which quietly drains your working capital. The good news is that both sides of the equation are entirely manageable with a bit of routine and discipline.

Build Supplier Relationships, Not Just Price Lists

It is tempting to treat suppliers as transactional: you order, they deliver, you pay. But the businesses that rarely run short are the ones that invest a little effort in the relationship. Suppliers prioritise the customers they trust, especially when demand spikes or materials get tight.

A few practical habits make a real difference:

• Share your forecasts, even roughly. If you expect a busy spring, tell them in January. Suppliers who know what is coming can plan capacity and hold stock for you.
• Pay to terms, or earlier if you can. Reliable payers get better attention, and often better prices.
• Keep one main point of contact on both sides. Chasing a different person each time wastes hours and invites mistakes.
• Be honest when something goes wrong. A calm phone call about a short delivery achieves far more than an angry email.
• Have a backup for your critical lines. Even a good supplier has a bad month.

None of this requires a formal contract review or a procurement team. It requires consistency.

Agree Clear Lead Times in Writing

Lead time is the single number that most often catches small firms out, usually because it was never properly agreed. "About a week" can quietly become ten days, and then a fortnight, without anyone flagging it.

Pin it down. Ask your supplier for the lead time in writing, and make sure you both understand what it measures — is it from the moment you place the order, or from when they confirm it? Does it include weekends and bank holidays? Does it change at month end or in the run-up to Christmas?

Then build a buffer into your own planning. If the agreed lead time is ten working days, plan on fourteen for your reorder calculations. That buffer is not pessimism; it is the difference between a smooth month and a frantic one. And if a delivery is going to be late, you want to hear it from the supplier before the due date, not after. Say so plainly and most will respect it.

Get Your Reorder Points Right

A reorder point is simply the stock level that triggers a new order. Get it wrong and you either run out or over-order. The basic calculation is straightforward:

• Average daily sales multiplied by lead time in days, plus a safety buffer for busy periods or late deliveries.

So if you sell roughly six units a day and your realistic lead time is fourteen days, you need 84 units just to cover the wait. Add a buffer of, say, 20 units and your reorder point is around 104 units. When stock drops to that level, you order.

Two things are worth adding here. First, treat fast-moving and slow-moving lines differently — a simple A, B, C grouping by sales value stops you spending equal attention on your bestsellers and your dust collectors. Second, watch your slow lines closely. Stock that has not moved in ninety days is cash you have already spent, and it is worth discounting or discontinuing rather than letting it sit.

Review Regularly — Stock Drifts

Reorder points are not set-and-forget. Demand changes, suppliers change and your own product mix changes. A monthly review of twenty minutes will catch most problems before they bite.

Look at what actually sold versus what you expected, check whether any deliveries were late, and note anything that nearly ran out. Seasonal businesses should review before each peak, not during it. If you sell online as well as in person, watch how promotions affect your run rate — a single good campaign can wipe out three weeks of stock in three days.

It also helps to walk the stockroom. Spreadsheets are useful, but physical counts catch the discrepancies that systems miss: damaged goods, mis-picked items, stock that has quietly gone missing. A quarterly count of your top lines is usually enough.

Making It Stick

Efficient supplier and stock management is not about sophisticated software or complex forecasting. It is about a handful of sensible habits repeated consistently: agree lead times clearly, build in a realistic buffer, set reorder points based on real numbers, and review them before problems appear.

Start with your ten best-selling lines. Write down the lead time, work out the reorder point, and note it somewhere you will actually see it. Then have a short, friendly conversation with your main supplier about what you are planning over the next few months. Those small steps alone will reduce both shortages and dead stock — and free up cash that your business can put to far better use.