But to celebrate the 4th of July 2022, customers got a free mini tube of Glowscreen with every purchase (some added sunshine without offering a deep discount). The best thing you can do is avoid excess inventory in the first place (you can do this with an ops optimization tool like Cogsy). After all, the more stock you have on hand, the harder it is to sell or give it away. However, you can’t offer this variety if excess inventory ties up working capital. Excess inventory might seem beneficial to the customer experience — I mean, isn’t being in stock what customers want? So, despite popular belief, intentionally holding excess inventory rarely creates more security in your business.
Poor inventory management and traceability
The Dead Stock Value Method involves determining the total value of dead stock inventory in a warehouse. To calculate, subtract the inventory that’s still sellable from the total inventory. Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond.
The Power of Real-time Inventory Tracking
This frozen capital can stifle growth and innovation, keeping businesses stuck in a loop of trying to offload outdated stock instead of moving forward. Supply chain disruptions, whether due to logistical challenges, natural disasters, or global events, can significantly impact inventory levels. Delays in the supply chain can result in stock arriving too late in the season, contributing to excess inventory. Building resilience and flexibility into the supply chain can help mitigate these risks. Excess inventory refers to the stock that exceeds the demand from https://for.kg/news-566839-en.html consumers.
Understanding Obsolete Inventory
Giveaways are an ace-in-the-hole marketing tactic for moving less-than-fresh inventory. Instead of using discounts as a https://www.kinospace.ru/person/12042 reactive tactic, use an operational planning tool to proactively build these promotions into your remerchandising strategy. For example, kids clothing brand Scout & Co sold its Mini Rodini product line at a 30% discount heading into the 2022 spring season. Some retailers wisely build post-holiday sales into their marketing calendars to get rid of seasonal leftovers. Running a sale is a classic way to increase consumer demand and eliminate dead inventory.
How SCMDOJO can help Manage Excess Inventory?
The source of the storm might be pressure from suppliers to order more than enough inventory or fear of an upcoming shortage. Mattias is a content specialist with years of experience writing editorials, opinion pieces, and essays on a variety of topics. He is especially interested in environmental themes and his writing is often motivated by a passion to help entrepreneurs/manufacturers reduce waste and increase operational efficiencies. He has a highly https://chinanews777.com/investment/page/4 informative writing style that does not sacrifice readability.
How to reduce and get rid of obsolete inventory?
- From regular inventory audits to effective communication frameworks with suppliers, we guide your business for practices that prevent excess inventory issues in the long run.
- Adopting a Just-in-Time (JIT) inventory management approach is a proactive strategy to prevent excess inventory.
- Before you make any changes to your stocking, you first need to do a full stock count.
- Both dead stock and obsolete inventory can have negative impacts on businesses, but effectively managing them can save businesses time, space, and money.
- A full warehouse can be a huge advantage during times of crisis (like a pandemic).
- These calculations provide different insights into dead stock and offer additional metrics to monitor inventory performance.
By identifying the signs of poor inventory management and taking steps to improve it, businesses can avoid the negative consequences and improve their profitability. A data-driven approach minimizes the guesswork in reorder decisions and helps align stock levels with actual market needs. You can offer various flash sales and clearance drives to generate interest among customers with significantly discounted rates. This will prevent the excess stock from going to waste and also enable consumers to get the product they need at much cheaper rates than they could elsewhere.