5 Simple Steps to Unlock More Value while Reducing your Excess & Obsolete Stock
Excess & obsolete stocks tie up your capital. They also occupy your valuable space. Follow these 5 simple actionable steps, and you’ll be on your way to making more money. As well as increasing profits, and getting rid of the dreaded excess inventory.
Start working smarter not harder with these simple steps:
1) Free up Your Space & Money With Effective Forecasting
The major reason for accumulation of excess stocks stems from the Holiday season sale.
Retailers in order not to lose out, order more.
Now, if they have a bad run they can’t help but stare at the accumulated excess inventory piled up. This excess inventory is your money and capital taking up space in your storage facility.
This can eat away at your profit.
You call it bad luck but in fact, it’s bad forecasting.
Study your past sales reports.
It is crucial to preventing your warehouse from having to accommodate excess stock.
What are a few actionable steps to getting better forecasting?
Put in an automated inventory management solution. This will enable you to place more conservative initial buy orders. Making your life and forecasting much easier. Shameless plug, to ours which follows these principles: Inventory Management
Automate reordering. When your stock reaches predetermined low-stock counts, set up for automated reordering.
Following these steps leaves no room for excess & obsolete stocks.
2) The Secret Inventory Method to Save Twice on Your Tax
What is this secret and unknown way to saving a lot of money on your taxes?
Donate and save twice your tax
Mismanaging excess inventory could prove expensive for business. Leading to not only waste of valuable time and draining profitability. As well as divert focus away from core business priorities.
IRC Section (e) (3) of the tax code, allows Corporations to donate excess inventory.
The best part? This tax code allows you to receive up to twice cost federal tax deduction.
It not only reduces your tax obligation. It also saves excess inventory. Putting non-selling products into the hands of qualified, deserving nonprofits across the country.
Gift-in-kind organizations offer effective but simple solutions for excess inventory.
3) Master Your Minimum Order Qualities
It is a well know fact:
Supplier MOQs (minimum order quantities) and price quantity breaks can cause surplus inventory.
Suppliers need MOQ’s or quantity price breaks to compensate for their costs of setting up a job. You need to prevent excess inventory from taking your profits.
The use of inferior content that creates a massive reduction of sales includes:
The goal is to work with the supplier to reduce set-ups.
What step can you take to make sure this happens:
Propose an annual commitment agreement with the supplier.
Your supplier can build the entire MOQ but agrees to hold the inventory and ship it in small quantities.
Leaving no room for excess inventory, and keeps you and your supplier happy and in good terms.
4) Cash in on your S.L.O.B
Slow moving and obsolete items (S.L.O.B) get ignored. Especially when you focus on your more profitable fast movers.
It is good habit to follow the 80/20 rule when working with inventory. But completely neglecting your slow-moving items ties up money where you need it most.
Each day that these items lie unused or unsold:
They continue occupying space
Utilizing labor & resources
Run the risk of obsolescence
Get in the way of more popular items
What are 5 great action step to getting rid of and cashing in on your S.L.O.B’s?
1 . Act smart and put your S.L.O.B on sale – Cut the price and get them out the door. You may lose out on the original price but you will make up for what you will untie in inventory.
2 . Send it to thrift channels – Give it to people who are good at getting rid of excess stock – thrift channels. These stores are great at purging excess inventory. Making your inventory move and not just sit.
3 . Offer them to subscription box – Group a few of these products. Send them to subscription service hungry for discount products. Or even group and create your own subscription service.
4 . Donate for tax deduction – Details above. End note: IRC Section (e) (3) of the tax code, allows Corporations to donate excess inventory. Take advantage of this great loophole.
5 . Offer to off-price retailers – Off-price retailers are retailers who provide high quality goods at cheap prices. IE) Haute Look – They need products and you can give your products, at a discount. You get inventory that is working harder. They get discount products. It is a win/win situation on all fronts.
5) This Neglected Method Saves Time, Makes Space, and Helps you Earn More and Most People are Not Doing it
Unfortunately, many companies tend to neglect this method. Or if they do it – they do it annually, which becomes a major undertaking.
What is this magical method:
Slotting
What are the benefits of this unsung hero?
Proper slotting delivers much needed space.
Locates the fastest-moving items closer to docks
Puts faster-moving items in more accessible locations
Minimizing Travel Distance
Maximizing Throughput
Maximizes Employee Productivity
What are the secret inventory methods of companies like Amazon?
In the best companies, slotting is a daily activity, not a quarterly or annual activity. As a daily activity, you can stay on top of it because it’s only a little bit of work and completely manageable. Start making your slotting a daily activity and you’ll start seeing a huge ROI.
Follow these expert proven methods, and I can guarantee you will be seeing a big difference. Both in moving your slow inventory and untying profits.
Parting questions of the day:
Which methods have you practiced that moves your slow inventory? What do you wish was there to make it easier to move slow inventory?