Dealing with excess inventory is a common issue that most of the people who manage inventory will come across. It can happen due to various reasons. No matter what, you need to have a strong understanding of how to deal with excess inventory effectively. Then you will be able to take control of the situation and make sure that you minimize your loss effectively.
Here are some of the most prominent techniques available for you to deal with your excessive inventory. You can take a look at these techniques and proceed with one or more techniques out of them to deal with excessive inventory effectively.
Return for credit or refund
Returning excessive inventory for credit or refund is a straightforward method available for you to deal with excessive inventory. You should negotiate this with the supplier. Some of the suppliers are looking forward to providing complete discounts. On the other hand, some of the suppliers will only offer you a discount. This will vary based on the nature of the relationship that you are maintaining along with the customer.
Divert the inventory and get new products
If you have components or raw materials in excessive inventory, you can think about diverting them to get your hands on new products. You need to check and see whether there is a possibility to use them in other plants or manufacturing lines at your company. In some of the instances, you might not be able to use inventory in the way it is. You might have to do some alternations to them. In such a situation, you have to bear the cost as an expense.
Some of the companies out there have developed completely new products out of scrap. You can take a look at this as well. Then you will be able to get maximum possible returns at the end of the day.
Trade your inventory along with industry partners
Trading inventory, along with industry partners, is another great technique available for you to follow. Here, the business competitors will become friends of you. Then you will be able to get the support offered by them to deal with excess inventory effectively.
You need to take a look at the items that are consuming the space that you have at the warehouse. You can follow some of the warehouse management methods to organize your warehouse and get most out of it. Then you can check if another company is in need of those items right now. If so, you can get in touch with that company and get into an agreement.
To receive benefits out of this solution, in the long run, it is recommended for you to think about developing relationships with other companies in the industry well ahead of time. Once you notice that you have excess inventory, you will be able to deal with the situation in an effective manner and overcome the negative consequences.
Sell inventory to customers.
Selling inventory to customers can be quite tricky. That’s because numerous options are available for you to consider. This option will vary based on whether your customers are consumers or business owners as well.
In case if you are selling the products directly to businesses or distributors, you can think about getting in touch with them directly. You can tell them that you are about to provide them with a great deal. You can then negotiate on the deal and see if it will work. Likewise, people who sell their products to retail customers will be able to provide discounts or bundled prices. Then you can get more people to purchase what you offer and reduce your excess inventory in an effective manner.
Based on the end customers, you need to come up with an appropriate plan. Then you will be able to reduce the excess inventory you have effectively.
Consign the product
Consigning the product is another effective method available for you to deal with excessive inventory effectively. Here, independent distributors will provide you with the chance to retain ownership while you take a cut from the sales. In most of the instances, it will take place on 75:25 split.
The consignment you end up with can be virtual. In here, you will be able to keep the goods along with you and ship them as soon as a sale is completed. You need to make sure that you are ready to respond to the sales quickly. Otherwise, there is a high possibility for you to miss out on the available opportunities. When it comes to physical consignment, the distributor will be able to store the goods and take good care of delivery. You need to take a look at this and move forward along with time.
Liquidate all your excessive inventory
Liquidating the inventory is a method available to get rid of excess inventory. If the solutions mentioned above didn’t work, you could think about liquidating your messed up inventory. Here, a liquidator will be able to purchase what you have as excessive inventory. This transaction will take place as a negotiated deal.
Auction on your own
You can even think about auctioning the items that you have in the excessive inventory on your own. If you have time and resources to do it, you are encouraged to go ahead with it. In some of the instances, auctioning the items on your own will be able to deliver positive results to you when compared to the process of liquidating the items. Hence, you must go ahead with it.
You can also take a look at the online platforms such as eBay, where you will be able to auction the items. You need to spend your time to list the items, and then ship them out. Using Inventory management systems can help you to overcome excess inventory and to get a great control over your stock. However, you will still be able to get the most out of it and reduce the loss that your business will have to deal with.