Excess Inventory is one of the important issues that 80% of the manufacturing industry facing is excess inventory. There are so many questions that whirl around the minds of the industrial experts, How to handle it? How to reduce excess inventory? How to liquidate it? How to avoid keeping excess stocks? How to manage the inventory? These are the main questions every industry is confusing with its excess inventory stocks.
Here are some of the solution and tips for inventory management, reducing excess inventory and lot more
5 Steps to Reduce Excess Inventory
- Analyze the demand variability
- Detailed Forecasting
- Lead Time Management
- Using of Inventory Control Methods
- Liquidating Obsolete Stocks
Analyze the Demand Variability
Demand variability is one of the most important challenges every industry is facing where it starts with customer needs. Analyzing demand variability is between manufacturers and different tier companies. If the customer demand is satisfied directly through the tier 1 suppliers its easy to predict and say how the demand is, but due to the business model we are dealing with right now where aggregators, dealers, tier 2 & tier 3 suppliers are playing the part of the consumers, analyzing demand variability gets tougher and tougher.
There it is very essential to keep track of the whole supply chain right from the producer to the consumer.
Very optimistic forecasting may be one of the reasons for the overstock of items without detailed customer demand analysis. Different forecasting techniques, standards, and detailed information for the need of the products can be implemented to reduce the excess inventory.
Lead Time Management
Sometimes it can be supplier lead time or manufacturer lead time, either way, it is one major issue that should be taken care of. Too much lead time will increase the carrying costs of inventory. Solutions for lead time should have Consolidated Domestic suppliers, maintaining order frequency, and much more.
Using of Inventory Management methods
Keeping products in the warehouse in organized manners, maintaining the order and deliver status, tracking of material purchasing, annual forecasting report are some of the steps taken by every industry for better inventory management. Apart from these there some analysis techniques used to control/manage excess inventory stocks.
Some of the analysis methods are ABC Analysis method, VED Analysis, Economic order quantity model, FSN Analysis Etc,… Using these inventory management methods, industries must operate upon avoiding these unnecessary risks.
Liquidating Obsolete Stock
Though industries try hard sometimes unexpected changes in market demand, technology changes, and a current situation like COVID-19 can lead to over and excess of stocks in inventory/Warehouse.
To solve these problems facing by industries some online liquidating companies like Goospares.com help with the process of liquidating, excess and unused inventory by simple steps that benefit every industry in many ways. Instead of scraping or keeping warehouse nasty with excess stocks these inventory liquidations will gain some profit for those obsolete spare parts.
Above are the simple steps that can help to over the pressure of excess stocks in the warehouse which is affecting the bottom line of each industry. Many industry’s ROI can also be reduced because of these excess or obsolete inventory.