Being a business owner is a difficult job, however, it gives you control over all the business activities, but at the same time, it comes with a milestone of responsibilities. A slight mistake in the business could lead the blame towards its owner this is for sure! Therefore, being a business owner it is the first and foremost responsibility of you to make sure your inventory management system is running smoothly and all the operations are being monitored 24 7 by expedient employees. However, it is no secret that there are many problems that could occur while managing the inventory of the business, like stockout situation, pending orders, and excessive stock lying in the warehouses. The latter is the most observed issue in the inventory management system of any business. But its solution is also generated at the same time to employ an automated inventory system, remarketing of the products, inventory liquidation, etc.
What is Overstock Inventory?
When you order surplus inventory to fulfill the requirements of the customers, but there is a lot of stock left in your inventory it is referred to as overstock inventory. There are numerous reasons due to which this great problem of overstock inventory occurs in the business. A poor inventory management system is one of the most important reasons due to which this situation arises. Therefore, you need to be careful enough who is managing the inventor department of your business.
Furthermore, another thing that leads to overstock inventory is the non-involvement of the business owner himself for the monitoring and supervision of each and every operation relevant to the inventory. He should be the one to direct the employees about the modern methods to be used for the production as well as the marketing of the inventory. It is no secret that overstocking costs are much higher than normal inventory costs. Therefore, effective methods should be used for the management of overstock inventory, one of these methods could be inventory liquidation.
Problems of Overstock inventory:
Getting rid of this great problem of overstocking is not a piece of cake. As discussed above, effective management is required to maintain a good inventory system. It helps to reduce the overstocking costs of your business because let’s face it, every item of stock requires proper focus as well as maintenance. Which in turn affects your business.
Let us now dive into some of the major problems that are caused by storing overstock inventory in your business;
Loss of business is increased:
It is an obvious fact that when the product of the business increases and is pending in the inventory being unable to sell, the ratio of overstock costs also increases. Which has a major impact on the profit ratio of your business because you have to take out and pay repair or maintenance costs from the profit of your business. So try not to let the overstock inventory eat up all the costs of your business.
Storage space is full:
We all know that an item of inventory needs space. Storing capacity should be vacant when one needs to enter the new and modernized products in the business. But when there is old inventory laying in the warehouses due to not being sold out, it creates a major problem for the new ones to enter. In order to avoid this issue, you need to make proper strategies so that the overstocking costs of your business are also minimized and later vanished, plus the storage space is always available to enter new and prevailing products in the market.
Customers are not satisfied:
Remember, it is the golden rule of doing business; “Do not sell the customer what you can make, Sell what the customer wants!” one starts a business for the purpose of earning profit only it is an obvious fact. You have no other intention of doing business, so the profit is also made when you are able to gather a large audience towards your business and products.
When you keep on selling by offering discounts to the customer, the things which are left in the inventory of your business, the client becomes irritated. Because he always wants something new and trendy. Therefore, Overstock inventory not only increases costs but also makes you suffer the loss of clients.
Steps to manage overstock inventory:
Following are some of the common yet important steps for the management of overstock inventory in your business;
Liquidation of your stock:
It creates an environment of chaos and frustration when you keep on seeing the same products lying in the inventory for a long time. Liquidation of inventory is the best option in this regard. You just have to contact a good liquidator who will buy all the excess, useless, and dead stock of your company at a reasonable price.
Liquidation of inventory is a great solution when you are facing the problem of overstock in your business. Just get rid of the stock easily by selling it all out to the liquidator. This prevents you from spending too many overstocking costs on the inventory and also decreases the loss of your business.
Remarketing the old stock:
However liquidation of inventory is the best solution to the overstock problem, but if you still have hope that your product could gain some sales, try out Remarketing strategy. YES! It helps a lot in generating awareness again and again in the audience. Obtain some unique and trendy ways to attract customers, there is a good chance that you will succeed in selling your overstocked inventory.
Offering discounts and displaying sales occasionally could also help you get rid of the overstock inventory of your business. When you are seeing that the sale of an item is below the line you can always merge it with some sort of trendy product and offer great discounted deals to the customers.
Automation of inventory management system:
It is no doubt that technology has made the lives of people so easy that everything is now being automated and reducing the involvement of human effort. People are liking this, yes! However, it has also made us lazy but who cares till our work is done more efficiently right? Therefore when running a business, use automated inventory management software that will guide you in the best ways to manage the inventory of your business.
In addition to this, the use of automated inventory management software like Inventooly could guide you to when your stock reaches above the maximized level. However, liquidation helps effectively to eliminate the overstock inventory, but by using this software, your orders are managed, handled, and also shipped timely which in turn helps a lot in reducing the overstocking costs of your business.