Simply put, excess stock can be a difficult issue to solve. Sometimes demand will be high, so you’ll order more of an item, and then suddenly it seems to stop selling. Other times you’ll rifle through all your paperwork and still have no idea where all the extra stock has come from.
That’s where an accurate and reliable forecasting process comes in useful. These processes can help improve customer satisfaction, reduce your expenditure, and free up valuable warehouse space. However, no matter how good your forecasting processes are, they will never work properly unless you maintain accurate inventory.
Read on to find out how you can solve your excess stock problem!
Businesses strive to avoid excess stock
Successfully managing your business inventory is a constant struggle – you are always trying to find the perfect middle ground between “too much” and “too little”. Too little stock often means you can’t keep up with customer demand, which is not good for business, but excess stock is an issue for businesses for more than one reason.Firstly, any items you keep in storage could be losing value as time goes on and may one day become completely obsolete. This is, of course, industry-dependant, but it could affect anyone, especially if you run a smaller business that only ever has a limited run of products.
Additionally, overstocking could cost your business a significant amount in terms of storage costs, especially if you are renting a warehouse space or working with a logistics partner. If you are unable to get rid of this stock in any way, then unnecessary monthly rent costs will add up over time. The fuller a warehouse, the more difficult it becomes to manage it efficiently and effectively. Picking becomes harder, as does maintaining inventory. This will only compound itself leading to a vicious circle of mismanagement.Lastly, and perhaps most importantly, sitting on stock could limit profits and cash flow as a result, severely affecting opportunities to grow your business. If you are spending a lot on bringing stock in and then you can’t sell it for profit, you are losing money every time you order.At best, you may be limited in the chances you can take to grow your business. At worst, it could lead to financial shortcomings and will seriously impact your bottom line.
The issues that can result in excess stock
There are lots of reasons why your business might be struggling with excess stock, including human error, poor analytical processes, or a lack of successful marketing.One of the most common causes of overstocking (and under stocking!) is inaccurate or ineffective inventory management processes. If you have a large amount of stock to check or an ineffective storage method, you may be buying additional stock that you already have hidden somewhere in your warehouse.Ensuring your processes are robust and pick up everything in your inventory will help you more reliably know when something needs to be ordered and when it doesn’t.
Forecasting is usually most effective when done using accurate data that has been collected about your business. It’s not worth making assumptions and guesses based on your personal experiences, as things will always change from year to year as external factors influence the way people purchase. Whilst it is easy to blame poor forecasting for creating excess stock, the underlying issue is normally inaccurate inventory data. Ensuring inventory is accurate is therefore the key to maintaining a good stock position.
Contact Orridge for stocktaking solutions
If you want to minimise business expenditure and maximise the accuracy of your inventory, get in touch with the team at Orridge today!We provide bespoke stocktaking and inventory management solutions to help improve the accuracy and outcomes of your forecasting processes leading to better customer availability, profitability and efficient warehousing. Send an email to contact@orridge.co.uk or call the office on 01279 775600 to ask any burning questions and find out how we could help your business today!