What is stock?
Stock is the total of all existing inventories of a company. In trade, this is the stock of goods; in production companies, it is the stock of raw materials and supplies, semi-finished and finished parts, as well as any merchandise that may be available.

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Inventory: Scope & Calculation
Stock is a central component in trading and production companies. It provides customers or production with the raw materials, goods or parts they need at all times and is therefore crucial for smooth processes.

Products that are located outside the company’s own premises can also count as inventory, provided that the transfer of risk has not yet taken place. This is particularly the case with floating, rolling and consigned goods. In terms of quantity, the stock is determined by stocktaking or the continuous notation of all receipts and issues.

Stock Availability

The monetary valuation can be carried out according to various procedures. Often the quantity of the existing stock is multiplied by the moving average value of the goods. From the point of view of the balance sheet, the stock is an inventory asset or current asset.

The stock level (in terms of quantity) and the stock value form the basis for calculating important warehouse ratios, which we also discuss in more detail in this guide.

What are minimum stock, reorder level and maximum stock?
To ensure the optimal availability of goods, three parameters are important in warehousing: the minimum stock level, the reorder level and the maximum stock level. Each of these values must be calculated sensibly, which can be done using formulas. Errors in the determination, on the other hand, can lead to either unavailability of goods or excess stock. Many ERP systems determine the values automatically and regularly on the basis of predefined framework conditions. In the following, we take a closer look at the definition.

Minimum stock
The minimum stock, which is also called safety stock, reserve stock or iron stock, has the task of compensating for unforeseen fluctuations in requirements or replenishment. In this way, the aim is to maintain ongoing operations, even if the following circumstances occur:

The supplier does not deliver on the scheduled date
The delivered quality does not meet the specifications
Production does not manufacture the required products on time
There is an unusual increase in demand
Shortages occur
The selection of the correct minimum stock level is basically based on the replenishment time (order initiation to goods receipt) and the average daily consumption, but must be sector-specific and based on own experience. In practice, the following formulas are recommended for orientation:

As a general formula for minimum stock:

Example: You consume 10 pieces of a good per day, the replenishment period is 5 days. Your minimum stock should be 1/3 of the consumption during the replenishment period according to the formula.

Minimum stock= 50/3=16.66 pieces

Of course, parameters such as delivery delays or excess consumption can be included in the calculation as required.

Reorder level
If the reorder level is fallen short of, this leads to the triggering of a purchase order, which is why this is also referred to as a reorder point. It has the task of triggering an order for goods in time enough without having to attack the minimum stock level. This in turn means that the minimum and reorder point parameters must be optimally coordinated with each other. Important variables for calculation here are also the consumption values and the replenishment lead time. The formula is as follows:

Example: A trading company sells 3 bottles of a red wine per day. The replenishment lead time is 10 days, the safety stock is 25.

Reorder level= 3 x 10+25=55 bottles of red wine

It follows from this: As soon as the stock falls below 55 bottles, new goods are reordered. Ideally, this is done by an ERP system in the form of an order proposal or direct generation of an order.

Maximum stock level
The main purpose of maximum stock, also called maximum stock, is to prevent unnecessarily high inventories. Thus, on the one hand, the limitation makes sense with regard to capital commitment (especially with expensive goods), and on the other hand, it may be absolutely necessary due to the available storage volume (large, bulky parts). The minimum stock is included in the calculation of the maximum stock. The formula is:

Maximum stock=minimum stock+optimal order quantity.

From this it can be deduced that the maximum stock should theoretically be chosen on the basis of the cost-optimal order quantity. In practice, however, this is not always possible, as it may result in too much capital being tied up or the storage capacity being exceeded. An automated calculation of the maximum stock level is therefore not always effective. If you set the parameter manually, however, you have to keep an eye on it and regularly adjust it to the current consumption values.

How can the optimal stock level be determined?
The optimal stock level must be the primary objective of the disposition and pursues the following goals:

Smooth operational flow
Low storage costs (capital commitment)
Cost-optimised procurement
Thus, several requirements are initially in conflict with each other, which is why it is necessary to find the ideal middle ground. To calculate this, you must first determine the optimal order quantity. A mathematical, relatively complex solution for this is provided by the so-called Andler formula:

Example: The annual demand for a product is 50,000 pieces, the ordering costs are 20 euros. The purchase price per unit is 5 euros and the inventory cost rate is 20 (%).

The optimal order quantity of the product is therefore around 2828 pieces.

Now you can calculate the optimal stock level using the following formula:

Optimal stock level= minimum stock level+optimal order quantity.

Example: If we assume a minimum stock of 46 pieces and the optimal order quantity of 2828 pieces determined above, the optimal stock is 2874 pieces (2828 + 46). With this stock quantity, all costs are optimised.

Warehouse ratios – meaning and application in practice
In warehousing there are various key figures with which you can determine the efficiency, security of supply as well as the importance of articles in relation to their consumption or their capital commitment. The most important warehouse ratios are presented below.

We have observed an increase in digital marketing influencers in recent years. Here, brands turn to influencers to reach more people, expand their reach, and build a larger and more reliable network of fans. To enable them to expand their reach, brands use various strategies to help them find specific individuals who have the ideal audience for their products and services. These connections also benefit the influencer, as they offer a better chance of entrepreneurship and numerous benefits, such as being recognised as an expert in your industry, as well as all kinds of financial and non-financial incentives. It’s a win-win situation for everyone.

People trust influencers 92% more than companies, according to surveys. This creates a business opportunity for marketers, as people’s trust in influencers can be transferred to their products or services. Customers are significantly more likely to believe a friend’s advice than a brand’s advertising.

Don’t be shocked if this is new to you. Let us help you! Having a digital influencer on your team can help you expand your reach and build trust in your brand. Here’s everything you need to know before you get started:

Digital influencers and what they mean
Influencers are usually those who have built a significant, engaged and active following on social media. They are the kind of people who can influence people’s beliefs and behaviour. They are experts in their field and have built strong relationships with their followers, based on mutual trust and two-way communication. The followers strive to be like the digital influencers, eat what they eat, wear what they wear, and buy what they buy. They are mostly on YouTube, Facebook, Twitter, Instagram, Snapchat, Pinterest, and other social media platforms.

You can bring your brand to the attention of a large audience if you have Digital Influencers by your side. Influencers are people who can help your business take advantage of social media sites like Snapchat and Pinterest. For example, Snapchat has 310M monthly active users who watch an estimated 10 billion videos a day. Another is Pinterest, which has more than 100M monthly active users.

All these features make influencers incredibly attractive for brands to partner with. On the one hand, brands gain access to customers who are already interested and inclined to buy. On the other hand, customers are more likely to trust a person rather than a brand if they feel they know that person personally and can interact with that person. As a result, brands today tend to pay a lot of money for targeted people to link their products or services to a favourable influencer.

Types of digital influencers that marketers should be aware of
Anyone on social media has the power to become an influencer. Celebrities like Kim Kardashian, Cristiano Ronaldo, Ellen DeGeneres, and others have been known as “influencers”. But not only the rich and famous can now be influencers, but also well-known bloggers, social media stars, and even ordinary consumers.

Influencers can be classified into three categories based on their reach:

Micro-influencers
These are people with fewer social media followers, usually thousands or tens of thousands. However, they have a higher engagement rate and a much more targeted audience. They are usually less expensive than superstars and more genuine, offering real things their audience can relate to. This influencer has the highest brand relevance and ability to drive desired action from their audience, based on personal experience with a brand and strong relationships with their following. This is best for conversions and engagement.

Banana Republic is an excellent example of using micro-influencers on Instagram for fashion and leisure. They work with men and women from SME companies to showcase their clothes in different contexts. Influencers provide topical content for Banana Republic and raise awareness among their followers in this way.

In total, Banana Republic ran 13 ads, which reached 43.2 million people. They not only increased brand awareness, but also got hundreds of images of their items at a low price.

Macro-influencers
Having the backing of a well-known macro-influencer can help you achieve significant results in a short period of time. They are rarely seen on the red carpet, but they may have millions of social media followers and are well-known in their field. They may be CEOs, journalists, or bloggers, and are often recognised as thought leaders in the industry. The higher the cost of working with an influencer, the more followers they have. You can make the most of them to increase brand awareness and engagement.

The partnership between Becca and Jaclyn Hill is an excellent illustration of this. Becca is an Australian cosmetics company, founded in 2001, with products launched in more than 36 countries by 2012. Estée Lauder bought Becca in 2016, yet the company continues to grow through influencer marketing.

Their partnership with YouTube star and digital macro-influencer Jaclyn Hill helped the company achieve massive growth and brand awareness. They collaborated on Champagne Pop, a limited-edition highlighter that gained immediate traction and became Sephora’s bestseller on the day of its debut.

Mega-influencers
These are social media superstars with a following of more than a million people. They have the most engagement and reach per post. Although, all this comes at a cost, and usually only the biggest brands in the industry can afford it. Mega-influencers are generally not that influential, especially if the goal of your campaign is conversions, as they have the slightest potential to drive audiences to the necessary action. It is best to build brand awareness and make first impressions.

To beat its main competitors, Adidas created an influencer-driven social media marketing strategy. The hashtag #MyNeoShoot was used to generate user-created content for the youth-focused campaign.

Adidas leveraged Selena Gomez’s social impact and celebrity status to call on fans to submit photos of themselves wearing Adidas merchandise.

The said campaign was a huge success, with more than 12k submissions and 71k hashtag mentions of #MyNeoShoot. Adidas saw a sales increase of 24.2 per cent, while Nike saw a sales dip of 9.1 per cent.

Finding the right influencers to target is one of the most challenging aspects of setting up an influencer marketing campaign. In many circumstances, the temptation is to go for the big names because they have the biggest audience and clout. However, it is more important to discover the right fit. It’s not just about the size of your audience; it’s also about how interested and targeted they are. Know that the more followers an influencer has, the more brand visibility you will gain, but the conversion rate will generally be lower.

Find the right influencer for your brand
It is time to choose an influencer who is a good fit for your brand, once you have made a decision and settled on the type you want to engage with. Several aspects, including your target audience, can help you determine how beneficial an influencer would be.

Demographics and engagement of followers
Followers and how likely they are to like, comment on or share your selected influencer’s posts are all part of post engagement. Do they reply, inform, or start a conversation? The greater the connections between the influencer and his followers, the more engaged the audience is. Go for someone who interacts with the audience rather than just pushing things.

You should also aim to find an influencer with followers similar to your target audience in age and gender. As a result, you should first find out who your average customer or client is and then choose an influencer with followers who fit that character.

Relevance of content
It is crucial to find an influencer whose followers are of the same age and gender as your target audience, as well as how closely the influencer’s material matches your business. Your brand will suffer if the influencer’s niche has nothing to do with yours. You need to make sure that the content your influencer delivers is consistent with your brand’s mission.

Will the material the influencer delivers be attractive to your target audience? Who is most effective at attracting and retaining your target audience? Who is popular in your industry on Twitter? If you advertise exotic holidays, for example, look for an influencer who tells stories about his travels around the world, posts videos of his adventures, and generally promotes the pleasant life we all desire.

Authenticity
The importance of authenticity cannot be overstated. As a business, you need an honest influencer who speaks from personal experience to develop brand loyalty and trust. Someone who is not just trying to increase sales because they are compensated, but who is genuinely interested in helping others by delivering value. You need an influencer who can tell memorable and engaging stories that matter to your target audience.

Would you trust an influencer’s recommendation? More shares and responses are generated by engaging stories than by simple discounts or product review. It is sometimes made too clear to users when something is sponsored. This quickly tarnishes the reputation and trustworthiness of the influencer and looks more like traditional advertising than influencer marketing. Allow your influencer’s individuality without giving too much direction, as this will make the content seem less authentic. Maintain the integrity of your brand, but don’t let influencers say things they don’t believe. You don’t want your followers to see it as outright advertising.

Conclusion
Influencer marketing has proven to be a very efficient way for brands to reach and engage with their target audiences on social media. Influencers and their genuine content help brands capture consumers’ attention and earn their support. Influencer marketing benefits both your brand and the influencers. It’s about give and take, so don’t approach influencers just to take. You need to provide value to your influencers in return and build good relationships. That way, you get a win-win scenario.

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