How much temporary stock cover does the move need?

Topic
Phased moves and business continuity
Reading time
3 minutes
Last reviewed
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  1. Work one product through the calculation
  2. Decide what counts as available
  3. Check what the stock does not cover

Temporary stock cover should be calculated for the specific products and commitments it must supply. A total stock value does not show how long the business can meet orders while production is unavailable.

Start with the agreed interruption assumption and demand for that period. Then identify stock that is accepted, usable and available for those orders. Keep uncertain demand and stock status visible rather than hiding them in a generous round number.

Work one product through the calculation

Here is a fictional example using identical units of one product. It assumes steady demand only to make the arithmetic clear.

  • Expected demand during the interruption: 40 units per working day.
  • Planned unavailable production period: 3 working days.
  • Units required for that period: 40 × 3 = 120.
  • Accepted stock available for those orders: 90 units.
  • Gap against the stated assumption: 120 − 90 = 30 units.

If the interruption lasts 5 working days, the same assumed demand requires 200 units. Against the same 90 available units, the gap becomes 110. The longer interruption leaves a further 80-unit gap under the same demand assumption.

This is a planning calculation, not a recommendation to manufacture either gap in advance. The owner must consider actual orders, variation in demand, production capability, storage, product life and the business's quality and financial requirements.

Decide what counts as available

Exclude stock from the calculation where it is not accepted for the intended use, already committed elsewhere or otherwise unavailable. Ask the responsible quality and commercial people to resolve uncertain status. Do not count unfinished work as finished cover merely because most of its production steps are complete.

Keep the products separate where they are not interchangeable. Plenty of Product A will not fulfil an order for Product B. A common component may support several finished products, but its remaining work and constraints need an explicit assessment.

Use the demand-scenario guide if expected orders are uncertain. Record the assumption's date and what evidence would make the calculation change.

Check what the stock does not cover

Stock may help supply a defined product during a production interruption. It does not provide urgent technical support, handle a complaint or decide a quality query. The critical-activities review should keep those continuing services visible.

Nor does stock prove that production will restart at the expected rate. Review accepted output after restart before promising replenishment based on running time or the first completed units.

Give the stock-cover decision an owner and review point. Update it when orders, usable quantities or interruption assumptions change. Keep any proposed extra production within the business's accepted technical, quality and commercial arrangements.

When discussing surplus equipment with UK Auction Group, explain whether its release depends on the continuing operation's supply plan. A stock calculation can inform the owner's availability decision, but it should not conceal unresolved restart or customer commitments.

See Phased moves and continuity for the connected decisions.

Sources

This guide is general information and education only. Legal, tax, employment and safety decisions may need a qualified adviser who knows your situation. Read the disclaimer.

Releasing surplus equipment?

UK Auction Group surveys the surplus, values it item by item and runs the sale around your operation, so the working site keeps working while the surplus is sold and collected.

Send a list of what you have, where it is and your deadline. Decisions that are still open can be included.

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