Confused how to manage leftover inventory? Find out solutions here!

Starting a business requires a great amount of dedication and commitment. It is not just about finances and management but also delivering your product and maintaining the brand reputation.

The inventory plays a crucial role in ensuring the quality and on-time delivery of your product. Good Inventory management can provide you with a solid foundation for your business, and to build a brand from local to multinational, a solid foundation is essential.

But, does Inventory management help in building a small business and help in its growth?

Inventory refers to all items, goods, merchandise, and material held by a business for selling in the market to earn profit. It suggests that inventory is the basic need for any business to sell its product to its customers. Having a good inventory would mean that you can provide your product to the customer efficiently.

Moreover, the items would not get sold at once, or a few would be leftover even after a year. This left-over inventory can incur a loss to your business; this could decay over time or become less workable which means it will lose its value. Thus, managing left-over inventory is essential to reduce wastage as much as you can.

By all this, we realised how important it is to manage the inventory of any business. But, inventory management is not as simple as it sounds.

So we are here to make it a bit easier for you to manage your business’ inventory. Here are 10 tips on how to manage left-over Inventory:-

1. First, categorise which is access inventory

There might be a lot of items that have been in your inventory for a long time now. That does not mean you need to get rid of them. You should analyse which items cannot sustain for a longer period and need to be replaced or repaired regularly after a time. The ones that need any maintenance are the ones you should sell as early as possible. However, a few items can sustain for a longer period; these are items that you can deal with later as they will not affect their cost in the future.

2. Return if possible

If your supplier accepts the excess goods you are left with, it would be easy for you to get rid of excess inventory in return for fresh product/raw material or whichever way you and the supplier have decided to deal with a left-over inventory.

3. Sell on discount

We recommend selling quality products, but a few of your customers would like to adjust with quality to get it at a cheaper price. Let them know that it is old stock, and you might as well name your sale “stock-clearance sale” so that people would know what they are buying and will not have a problem with it in the future. It is better to reduce profit margin by selling it on sale rather than making a complete loss.

4. Put it in front

Some items may be left-over as they are not easily visible or accessible to customers. Try to make changes by changing the place of products in your store. Bring the items from the back to the front. It will catch customers’ attention and might get sold.

5. Best out of waste

It depends on the type of product you are selling. If you can make something useful out of the leftover waste of your inventory, it could be recycled, and created into a whole new product serving some useful purpose.

6. Auction it

You can also sell your left-over inventory as a whole in an auction. Here an interested buyer will buy a whole lot of your inventory at a price that will suit you and the buyer both. It simply works as any other auction does, and an interested buyer would bid for your product.

7. Sell in a bundle

Similar to discounting a product, bundling them together and selling them at a reasonable price can reduce inventory wastage. You can make a bundle of 2-3 different items or 2-3 packets of the same item and sell them at a lower price than their original collective price. It will increase your sales as customers would be much more willing to buy more of any product if available at a lower price.

8. Trade with another seller

There might be someone you know who trades in the same product as you do. Find out if they are interested in buying your excess inventory, which might be of use to them. They might make something useful out of it or use its spare parts to repair their product or to replace an already sold product that turned out to be defective. It will also help you develop business relations with other traders, which will help you in some way or the other.

9. Offer such items as incentives

Get your excess inventory sold by attaching them to other products. On purchase of that product, this excess product would be given free or at a discounted price. It will ensure the sale of both items. You can also make this offer exclusive for regular customers or your employees.

10. Scrape it or donate it

It again depends on the material used in your product. If it is completely wasted now, you need to scrape it, and the person who will do that for you will offer you some money as per the material used. In case your product does not qualify quality criteria but still can be used, you might consider donating it to someone or some organisation.

Conclusion

A well-maintained inventory can help your brand function effortlessly. Therefore, the tips we discussed here would help you manage your left-over inventory and improve the quality of your business or brand.

Also Read:

1) Things You Should Consider if Starting a Business During Lockdown
2) 10 Things to Check Before Starting an E-commerce Website
3) How to Answer the Phone Professionally at your Business?
4) How a Good Market Research Can Give You a Steady Start?

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FAQs

Q. What are some tools for inventory management?

Ans. Here are some tools that can be integrated with your inventory management to give you better visibility and control you need for efficient operations -

Reports - Reports like - sales, purchase, inventory availability, etc.
Reorder alert - This will help you avoid going out of stock for any product.
MS-Excel - eases the whole analysing process by using excel sheets, pie charts, bar charts, etc.

Q. Why is having excess inventory is considered negative for business?

Ans. Having an excess inventory can lead to low cash flow, which is bad for any business. Also, it will take up too much space, which could be a problem for when you would need to store fresh products. It will reduce profitability as well.

Q. What are different types of inventory?

Ans. Types of inventory can be:-

Raw material/components
Finished goods
work in progress
Maintenance, repair, and operating (MRO) Goods
packaging material
safety stock, etc

Q. What are the challenges in managing inventory?

Ans. Some challenges in managing inventory can be:-

Inconsistent tracking
Inaccurate data
Changing demand
Managing warehouse space
Inventory loss
Poor communication
Inefficient processes
Evolving packaging, etc.

Q. What is a good inventory turnover ratio?

Ans. It can hugely depend on industry to industry and products you are selling. However, in general, a good inventory turnover ratio is 5-10. Which indicates you sell and restock inventory every 2-3 months. It will balance between having enough inventory on hand and not reordering too frequently.