Excess Inventory – A Problem
Most companies are filled with excess Inventory at one point or another. It can be costly due to the space it occupies and the capital it ties up for its upkeep. There are times when an organization needs to make room for newer models on shelves by removing old products because of dwindling sales or technical support issues.
Excess and obsolete inventory cause a lot of unwanted issues like financial loss, reduction in sales, blocked cash flow, congested warehouses, shrinkage, spoilage, to name a few.
Inventory clearance is a way for your business to reclaim space in the warehouse; simultaneously recovering some of its intrinsic value. Inventory could be overstock, end-of-line leftovers, surplus inventory, obsolete items, and more! Inventory clearance is a process that reclaims space in warehouses and tries to recover some of the value from products.
How to deal with excess inventory?
Inventory clearance companies are the best way to get rid of your surplus inventory. They discreetly dispose of through a network of exporters, wholesalers, flea market sellers, and small retailers. There can be many benefits to using Inventory clearance companies’ services; they have ready cash and warehousing space available for quick turnaround times. The pricing offered by these companies is mostly lower than the amount you would achieve if you can clear the items yourself. In the end, with time you save from not doing this work on your own, it turns out to be worth it.
Dead Stock/ Inventory
Internal systems and processes are the root cause of dead stock. External factors like slowing customer demand, new technological development contribute to creating excess inventory. Excess inventories don’t just happen; they’re a sign that there’s an opportunity for improvement within your internal process.
Inventory Management Best Practices
To avoid overstocking, you must be mindful of your inventory. The best practices of inventory management listed below ensure an efficient and profitable operation for all businesses across industries:
A. Start With Your Own Data
The way we collect, aggregate, and analyze data has changed dramatically in recent years. Not only can smaller organizations now afford the expensive cost of leveraging large amounts of information but they are also able to compete with larger corporations; thanks to inventory management software.
ZapERP is an online inventory management software that offers SMBs the opportunity to manage their contacts, warehouse, invoices, stock levels, and more. Its advanced reports help accounting integrations with multi-currency features; this program produces an intelligent eCommerce solution for any business size or type. ZapERP has been designed especially for online retailers; can also be used by offline store owners, looking for user-friendly inventory management solutions.
B. Maximize Inventory Turnover
Inventory turnover can be calculated by dividing the cost of goods sold and reordered in a given period. It’s a ratio that first divides the cost of goods by average inventory, then inventory turnover rate by 365 to determine how many days it usually inventory turnover can be calculated by dividing the cost of goods sold and reordered in a given period. The inventory turnover ratio is a way to measure the number of goods that are sold concerning how much they cost. Maximizing this helps identify when items need restocking while minimizing costs such as spoilage or holding fees from suppliers.
C. Categorize Inventory Items
Inventory management is an important part of inventory control. Maximize your turnover, by prioritizing your inventory. Not all products are created equal. In order of importance:
- Items of high value and small in number
- Items of moderate value and moderate in number
- Items with low-value but a large quantity
D. Forecast Demand
The unpredictability of demand has been an issue for a very long time – making it hard to forecast what people will want next; this is where the problem with inventory optimization comes in. However, this isn’t just your run-of-the-mill supply and demand dilemma; there are many other factors such as seasonality and promotional offers that make accurate forecasting difficult.
Automated demand forecasting is available to businesses of all sizes with the help of inventory management systems.
E. Track Inventory By Batch & Expiry Date
Raw materials to finished goods – batch and expiry date tracking allow you control over your inventory from start to finish. Unique barcodes give us the ability to track where each inventory item has come from, how much is left in a particular branch location and when it will expire.
F. Follow FIFO Or LIFO
You have perishable products, FIFO is the way to go. Otherwise, your business will end up with items that are past their expiry and must be written off as a loss. With non-perishables – LIFO suits better, as it doesn’t matter what order they come in or go out since there’s no risk of spoilage for these goods. However, if you carry seasonal staples alongside highly seasonal inventory, a mixed approach may work better for you.
G. Inventory Kitting/ Product Bundling
Inventory kitting is a system that groups, packages, and sells separate items as one unit. Any purchase of an item from the bundle will link it to your inventory management system helping you monitor sales in real-time. Inventory kitting is a great way to sell multiple items at once.
You don’t have to sweat the surplus stock. When handled correctly, excess inventory can open up sales, customer engagement, and tax-saving opportunities for your business.