As your company reacts to client demands and updates current inventory to better meet the needs of your customers, excess and obsolete inventory can begin to build up in your warehouse. You may choose not to move or do anything with the stock as it could prove beneficial in the future. However, as time presses on, the excess and obsolete inventory increases, taking up more and more valuable real estate in the warehouse. At some point, you need to critically evaluate this inventory. Here is a simple methodology for doing so..
Analysing Your Stock
When going through your inventory, you can break anything down into 4 categories. These categories include:
• Current Inventory
• Buffer Inventory
• Seasonal Inventory
• Obsolete Inventory
You can forecast the inventory you will need based on current production or sales trends.
Now do a simple what if? How much buffer stock should we hold to cover an unforeseen event…a mechanical breakdown, a transport problem, even unprecedented demand.
Your seasonal stock is for specific times of the year, and the last category is what is left – stock that once proved part of your inventory years ago but no longer is needed or used.
Why Evaluate Your Stock?
Simply to maximise your warehouse space whilst ensuring you can meet demand. You may also wish to evaluate the logistics of warehouse storage at the same time to ensure the most efficient stock picking processes can be utilised.
What Causes Excess Stock?
A handful of variables are at play with the creation of excess stock. Typically, excess stock occurs due to production changes, technological upgrades or even ordering too much of a particular product. From time to time, the company may order the wrong part or make forecasting errors. Predicting market demand is at best an inaccurate science.
By following the tips presented in the evaluation of excess and obsolete inventory, you’ll identify what no longer remains valuable to your business and may in fact cost you money. By taking advantage of being able to sell your excess stock through Industrial Clearance, you’ll make extra room available in your warehouse, allowing for additional floor space for the current stock you’re selling. Check out the Seller details here. It is free to list.