Should You Keep Stock or Work to Order?

A customer asks for a product and it is not on the shelf. On one side there is the thought "if I had kept it in stock, I would have sold it"; on the other, there are products that have sat in the storeroom for months. In small businesses, which product stays on the shelf and which arrives to order is usually decided by habit.

Both paths have situations where they fit; the right choice can vary with the type of business, the product and how willing customers are to wait. This article looks at the difference between the two paths, what each brings and costs, how a mixed arrangement can be set up and how waiting times can be explained to customers.

Where the Two Paths Differ

The difference starts with whether a product is obtained before or after the customer asks for it. A business that keeps stock buys the product in advance and holds it on the shelf; a business that works to order requests it from the supplier once the customer asks. One puts speed first, the other flexibility.

Although the two paths look like opposites, they can sit side by side in the same business. The decision is usually made product by product rather than all at once.

What Keeping Stock Brings and Costs

Stock can make it possible to hand the product over straight away. A product on the shelf can help avoid losing customers who do not want to wait, and can be less affected by supplier delays. On the other hand, a product waiting on the shelf ties up money and storage space, and some products can age or spoil over time.

We looked at how money waiting on the shelf, combined with late collections, can tighten cash in our article on following up on late payments. For broader ways of setting stock levels, see our inventory management automation guide.

What Working to Order Brings and Costs

Working to order can make it possible to offer a wide choice without keeping products on the shelf. Customers who want a particular size, colour or model can be shown more options, and the need for storage space can shrink. In return, the customer has to accept a wait, and the delivery date depends on the supplier.

Supplier delays are the most sensitive point of this path. We described what can be done in such a case in our article on what to do when a supplier delivers late.

Which Path Suits Which Product

Asking a few questions for each product can make the decision easier: How often does it sell, will the customer accept a wait, does it spoil or age, how quickly does the supplier deliver? The answers can point to whether the product belongs on the shelf or on the order list.

Seeing earnings product by product can also support this decision. We described ways to understand which product or job pays back the effort in our article on which jobs actually make money.

A Mixed Path: Some Products in Stock, Some to Order

For many small businesses, using both paths together can be a balanced solution. Sorting products into groups can make that balance easier to set up.

Three groups can stand out.

1. Fast-selling products that keep well

Keeping products that sell regularly and have a long shelf life in stock can help make sales without making customers wait.

2. Custom-size and high-value products

Ordering products made to measure or with a high price as needed can reduce the money tied up on the shelf.

3. Seasonal products

For products sought in certain periods, combining a limited stock with ordering can reduce what is left over at the end of the season.

How to Explain the Waiting Time to Customers

For a product that arrives to order, what customers most want to know is when it will come. Stating this clearly at the time of ordering can reduce later questions and disappointment. It makes sense to give an estimated date based on the supplier's information plus a reasonable margin.

If "when will it arrive?" is asked again and again, a ready-made reply can make things easier; we covered this in our article on what to do when customers keep asking the same question.

When to Revisit the Decision

A stock or order decision does not have to be made once and left alone. It makes sense to rethink it when a product's sales change, the supplier changes or storage space gets tight.

Season changes are also a good moment to check. Products that sit on the shelf for a long time, and products customers often ask for but cannot find on the shelf, can show where the balance is shifting.

Summary

Keeping stock can give customers speed, while working to order can give flexibility; both have situations where they fit. How often a product sells, how willing customers are to wait, the risk of spoilage and the supplier's speed can help with the decision. For many businesses, a mixed arrangement can be balanced. For products that arrive to order, explaining the waiting time clearly from the start can protect the relationship with the customer.