There are many reasons why distributors have excess inventory. Quite frankly, it is not always possible to avoid. Here are five of the main causes in my opinion this happens.
Reasons for Excess Inventory
1.) You over purchased products because you did not have a real-time view of your inventory on hand.
Our entire business revolves around automating distribution and manufacturing companies using real-time inventory control solutions along with scanning and bar-codes.
2.) Your customer returned a huge amount of product.
There is not one distributor who has not dealt with this. Although you want to avoid this with clear policies and important fulfillment procedures, this does happen. Here are some tips to avoid unnecessary customer returns.
3.) A popular product quickly became yesterday’s news.
Some industries change faster than others but let’s admit, there are products that no longer sell and you want those off your shelves.
4.) You purchased another company and acquired their inventory.
This is a very common theme for both manufacturers and distributors. By either merging with or purchasing another company, you now have additional inventory to control.
5.) Your purchasing and warehousing personnel were operating on two different systems.
Our goal at DCSC, is to provide your distribution operations with a real-time system that keeps everyone on the same page when it comes to your inventory. That is why the DCWarehouse Automation Solution operates as a completely integrated software application leveraging the Sage 500® ERP System. Our solution works in real-time for all inventory processes such as receiving, shipping, counting, transfer orders, returns and more without leveraging a myriad of databases and third party applications. By using wireless devices to record all inventory transactions immediately your company wins.
But what to do with your inventory if you cannot sell it? There are several solutions available to you but you are not going to always recoup your original expense and total carrying costs. These solutions include:
1.) Discount the Inventory and Sell It
Discount your products and offer your sales-people incentives to move it out or post this on your Business Web Site. The pros of this include more touch points with your clients that could result in additional sales.
2.) Transfer Products to Another Location
Transfer the products to another one of your locations that can sell them faster. This is ideal if you have locations that are in different climates or environments that can move the specific products with less effort.
3.) Donate Your Inventory to Someone Who Could Use It
Donate the products to a Non-For-Profit Organization. This is an ideal solution that not only “gives back” to the community but may have some tax incentives for you.
(Please contact your CPA for advice.)
4.) Dispose Your Inventory
Throw it away or dispose of it. In my opinion this is not the very best solution but at minimum it frees up space.
5.) Sell It to a Close Out Company or Unload it on eBay®
Consider selling it to a close out company that specializes in buying and selling inventory. Liquid cash could be used towards marketing, technology and other investments that are worth more to you than dead stock.
In fact, have you heard of Radwell International? They are a leader in MRO inventory and they may be able to take on your excess inventory. Plus they also can provide tips and tools to help you continue to run your distribution or manufacturing operations. Email them today to learn more SellTo@Radwell.com
Want to Improve your Inventory Management?
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