No matter how successful you are at inventory management, at some point you’ll likely experience an excess of stock. Not only are there ways to prevent it, but there are several routes you can take to get rid of it.
In this post, we’ll outline it all so that you can better prevent and deal with excess inventory, when it does occur.
What is Excess Inventory?
Excess inventory is defined as having a greater amount of inventory needed for sales at a given time. You may no longer need the inventory at all, especially if you stock electronics or trendy items that remain popular for a short period of time. You want to avoid having excess inventory since that ties up cash flow that could be used elsewhere.
How to Avoid Excess Inventory
The best way to manage inventory is via wholesale inventory software. Such software helps you track inventory levels in real-time, which ensures that you and your customers are always in the know when it comes to what you have available and where (which warehouse).
In order to keep up with the demands of fast-moving inventory and the ever-fickle buyer, you must also enable people to shop online—where they can view available inventory in real-time— just as they can when shopping as consumers.
Because you can view inventory levels in real-time, you can avoid the delay experienced when tracking inventory via Excel spreadsheets. Using spreadsheets to track inventory is simply too slow to keep up with today’s pace of business.
In addition to using inventory management software, you can also use demand forecasting to prevent excess stock.
The foundation of this technique requires human judgement but technology as well. By reviewing prior year sales data, you can plan for similar scenarios in the coming year. This, of course, requires that someone review the data and make a judgement call based on the prior year sales figures. This method also includes reviewing what sales has forecasted for the coming month or quarter, usually within your CRM.
How to Deal with Excess Inventory
First, you’ll want to investigate why you have excess of a given item. Were sales forecasts off or was there an unexpected spike in demand?
If your sales forecasts were significantly off, you’ll want to meet with sales managers to determine why predicted sales did not come through as expected. Often, if there was an unexpected spike in demand, this is often something few can predict and is one of the inventory pitfalls experienced as a wholesale distributor.
Either way, you’ll want to dig into why you have excess inventory so that you can prevent it in the future, if possible.
If you find yourself with excess inventory, a great way to get rid of it is to send an offer or promotion out to current customers. By running a promotion, you may be able to get rid of all of your excess inventory.
You can also sell excess inventory in online marketplaces, like eBay, Etsy or Amazon.com. Each of these marketplaces has a sizeable, engaged audience that may be interested in the inventory you’re attempting to get rid of.
If you’d like to learn how Systum can help you avoid excess inventory and track your inventory in real time, fill out the form below.
Categories: Inventory Management