What Is Floor Stock?

Malcolm Tatum

Also known as "back stock" in some settings, floor stock is a term used to identify inventory items that are used to replenish stock that is maintained on a store floor or in a designated area within a plant facility for use by employees without the need to make use of a requisition form. While the use of the term is slightly different in retailing than in manufacturing, the core concept is very similar, in that goods are readily available to those who can make use of them. As with any type of inventory situation, steps must be taken to monitor usage and turnover so that an adequate amount of back stock can be kept on hand.

Inventory should be taken so that an adequate amount of floor stock can be kept on hand.
Inventory should be taken so that an adequate amount of floor stock can be kept on hand.

In a retail setting, floor stock refers to the inventory of goods that are kept in a back room or storage area until those items are needed to replenish the shelves in the main store area. When and as customers purchase the items on display, store personnel will remove items from the stored inventory and place them in the vacant positions on the store shelves. Typically, this process involves filling out documents that help to track the movement of goods from storage to display in the main store. Doing so makes it easier to determine when and how many units of a given good to purchase from vendors in order to maintain an adequate amount of back stock.

The same general concept is sometimes employed in manufacturing plants. With this application, an area of the plant is designated as the repository for items that can be used by various departments without the need to fill out a formal requisition that results in a charge back to that department. Items such as copy paper, pre-printed company forms for use in different departments, and even small supplies like staples and pencils are often managed using this method. The stores manager will typically check the balance of the floor stock once or twice a week and order replacements based on the current trend of usage for those items.

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With any application, the purpose of floor stock is to make sure items that are likely to be consumed with some regularity are in steady supply and easily accessible. Retailers will base the amount of back stock kept on hand based on customer demand for those goods, usually by setting a minimum quantity to maintain in holding in the back room. Once that minimum quantity is reached, orders are placed with vendors to replenish the floor stock before it is exhausted, a strategy that tends to keep inventory low while still avoiding extended periods in which shelves in the store are left empty.

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