Excess Inventory Management

Excess inventory management can be termed as managing the dead stock such as goods and materials that has not been sold and that exceeds the demand of customers. Here will describe the implications behind the strategies of excess inventory management.

So does excess inventory management implies

Understanding a company’s stock mix and the various demands on that stock is the function of field inventory management, also commonly known as inventory management.

Why does Excess Inventory Exist

Excess in inventory can be due to many reasons revolving around the store. This disruption in the product cycle is broken down into categories like shipment delays, technical challenges, and other factors including consumer behavior and seasonal changes, etc. Shipment and technical challenges collectively contribute to 85 percent of dead inventory, and the rest 15 percent are through other abstains.

Consumer behavior plays a significant role when it comes to inventory excess. Marketing trends and seasonal changes influence a shift in sales habits. Industries dealing with rapidly moving consumer goods.

6 Ways to Manage Excess Inventory

Excess inventory is frequently brought on by underestimating customer demand in industries that deal with quickly moving consumer goods where demand is difficult to forecast, which causes businesses to overstock in slower-moving items.

Doesn’t matter how smooth your operation is, at some point in time your business will face the issue of surplus inventory. Instead of bleeding dry due to the inevitable value decline experienced by aging inventory, focus on preventing the damage caused by carrying costs. Following are some ways you can manage and keep a steady flow of inventory.

1. Through Returns and Refunds

Returns and Refunds are the best options for businesses with excess inventory. If a supplier is willing to provide a refund or suitable discount, it can narrow down the impact of the hit, however, you may still have to carry the cost of handling and transport, but it would be covered by the inventory that can still be used.

• Change the Inventory to new items

Companies often repurpose scraps and leftovers of excess inventory to produce new products. Based on the scarps, the components or raw materials can be utilized for different production processes or facilities, so the cost of any necessary rework on the inventory has to be considered.

• Selling it to Customers

Selling excess inventory can go two ways, you can either sell it to consumers or businesses. If looking to sell finished goods to distributors or companies directly, you might be successful in reaching out to them with a unique or special offer. For this you have to consider packaging your product at a reduced cost. However, if the target is simply selling it to consumers then the efforts are far less in comparison. By simply adding promotion tactics the cost can be recovered through consumer sales.

• Trading with Industry Partners

Your competitors in the industry might just be your ticket to saving huge inventory loss. While managing the excess inventory, try engaging with the industry partners they might be short of what you need to sell. To top it off, they might have something you can trade with. Such a management strategy can help get the excess inventory in check and build relations in the industry that will help your stability.

• Auction It

Auctioning it yourself is another way to manage the excess inventory. With a rising trend of digitization, there are websites now where stores sell their inventory. Nevertheless, this process requires staff and constancy and may not result in the complete sale of the leftover inventory.

• Consign the products

Consigning the products to independent contractors will allow for maintaining ownership and getting the cuts of the sales, typically of 75/25 split. These consignments can be handled either virtually, enabling you to keep and ship products at times of sales, or through physical distributors that hold and delivers the products for you.  If nothing goes as intended, simply liquidating the excess inventory will do the trick. In this, your goal is simply to get rid of it. A liquidator will purchase your possessions at a price that is agreed upon, and that will be the last you will have to deal with them. 

Excess inventory management revolves around the balance of maximization of returns and saving on any additional staff time or resource investment. Handling this demands monitoring the stocks and disposal of surplus inventory all year round.