How to Effectively Manage Overstocked Inventory and Improve Your Bottom Line

When products collect dust on shelves instead of being shipped into customers' hands, that is a sign of overstock inventory. In truth, overstock inventory is so much more than just overordering products; it's a combination of mismanaged stock, inaccurate projections, canceled orders, unpredictable customer demand, or late delivery of goods. Overstock inventory is something to try and avoid at all costs.

Having too much inventory that's not selling decreases your cash flow — instead of selling your products and making that revenue, it's sitting there untouched on your shelves. Excess merchandise loses its value the longer its held in stock, and can potentially take away valuable shelf space for a product in higher customer demand. 

Recognize When You Have Overstock

If overstocking inventory is so bad, it would be easy to spot if something's not selling — or so you would think. In truth, overstock inventory can stem from a wide range of issues, including:

• Unplanned shipment delays, such as processing times, order frequency, or international regulations.
• Challenges with your warehouse management system (WMS), which can affect purchase orders, EDI processing, and cause a general lack of visibility into your data.
• Other factors such as returns, quality requirements, etc. 

Because of these factors, inventory problems don't just happen overnight. They are often rooted in mismanagement and can creep into your bottom line until you see it greatly impact your costs. 

General costs of unsold inventory that can compound onto one another include:

• • Renting warehouse space for unsold items
  • Utility costs for maintaining proper storage conditions
  • Potential risk of loss, damage, or theft

In order to prevent these costs from ever affecting your finances, you should take proactive steps the moment you start seeing an inventory bottleneck. In order to do this, you need a WMS that provides the proper visibility into your supply chain.

Solve Overstocked Inventory Through Reporting

Your WMS should be the beating heart of your operation. It will help you monitor SKUs, UPCs, the amount of stock per item, product storage location, supplier information, and more. By collecting this crucial data and keeping tabs on every aspect of your warehouse, you'll be able to track goals and key metrics — and be the first to know when your inventory isn't moving as much as it should. 

Here are some additional ways a WMS report can help your operation succeed in getting inventory off the shelves.

1. Reorganize inventory storage areas — Having a place for your inventory makes grabbing and storing products quick and efficient. Your WMS can help you determine which items may be better stored in which areas. For example, putting frequently purchased items together for fast grabbing, or keeping higher-selling items toward the front so they are easier to grab.
2. Modernize how you track inventory and shipments — Say goodbye to excel sheets. A WMS will monitor your incoming and outgoing shipments across multiple channels and send automatic alerts when a package has changed carriers or reached its destination.
3. Use forecasting to prevent overordering — Forecasting is an excellent way to predict how much inventory you'll really need on hand to meet demand. If you predict a slower season, order less inventory so you don't have it sitting around on shelves taking up precious space.
4. Create receiving procedures — You can't sell or ship inventory that hasn't been properly recorded. A WMS makes reviewing your purchase orders against your products a seamless process.
5. Regularly monitor inventory levels — This one seems like a no-brainer, but regularly keeping track of what products you have in your warehouse can prevent mismanaged inventory. Spotting inaccuracies and acting on them while they're still small prevents large losses.

Reporting Made Easy With Materialogic

Balancing the right amount of inventory in your warehouse is a delicate game — one that's made easier through the help of capable 3PLs like Materialogic.

Our user-friendly WMS Infoplus gathers accurate warehouse data in real time. You can completely customize your reports so you only see the data that you need, and track goals and metrics specific to your operation. This makes growing and monitoring your operation easy and efficient. 

Schedule a discovery call with our team to see how you can better manage your overstock inventory through our robust technology.