![]() Sell to customers. The route for this depends on whether your customers are businesses or consumers.This type of interaction not only helps your inventory management, but it builds relationships, which are always valuable. In return, they might have something you can use. The items taking up space in your warehouse could be exactly what another company needs right now. Trade with industry partners. Competitors might be your friends when it comes to sharing inventory and supplies.Some companies have created entirely new products based on scrap and overage from others. The inventory might need some rework, so the cost of that should be taken into account. Perhaps the raw materials or components can be used in other lines or at other plants. You’ll probably take a hit on shipping and handling, but at least you can swap out the dead excess for something you can use. If your supplier allows this and will give you a full refund or a reasonable discount, then this might be the best option. Here are 10 ways that might help you reduce your excess inventory. ![]() The type of inventory will also limit the options available. Some methods won’t work for all excess, which can occur at any stage from raw materials to finished goods. Amounts that would be considered obsolete, or value has reduced, should be adjusted in the financial statements accordingly.ĭisposal methods can be tiered regarding the percent of original value you’ll be able to get. At least annually, your company should evaluate potential obsolete inventory or inventory whose value is less than cost. But, at least you can stem the bleeding from carrying costs and halt the inevitable decline in value faced by aging inventory. In most cases, you won’t be able to recover all your costs. Many manufacturing and distribution companies stocked up on inventory over the last few years due to supply chain constraints, increasing prices, and increasing freight costs, and are now faced with excess inventory and lack of warehouse space to store the inventory. But unforeseen shifts in the marketplace or technology may also result in overstock. The culprit may be previously purchased product arriving from areas with supply chain constraints, purchasing too much, or overly optimistic forecasting. No matter how lean your operation is, your company will likely end up with excess inventory at some point.
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