For manufacturers, excess inventory in your warehouse can be a massive problem. According to a recent article in Manufacturing Business Technology, 15% of all goods are either returned or never sold to begin with, and a large portion of these goods end up back with the manufacturer. Assuming your warehouse is right-sized to fit your typical stock needs, a 15% product overage will quickly start cutting into your space, making it harder for you to optimize your storage. This won’t work in today’s landscape of tight margins and increased warehouse efficiency.
Start reducing your excess inventory right now with tailored advice from Scanco. Contact us online or call us at (877) SCANCO-1 to schedule your free warehouse software consultation.
How You Can Reduce Excess Inventory in Your Warehouse
Manufacturers and distributors often choose to liquidate their excess stock through third-party auctions or discount sellers, but this isn’t a long-term, sustainable solution because it cuts into your margins and it takes time to effectively negotiate with resellers. Plus, if you don’t take care of your excess inventory problem once and for all, you’ll have to waste time storing and offloading your surplus repeatedly throughout the year.
Start reducing the excess inventory in your warehouse today by following these five steps in order:
- Get rid of your old inventory
Before you can do anything else to optimize and streamline your warehouse, you’ll need to clear out the trash. Similar to decluttering your home closets before reorganizing them, completing this step gives you the space you need to plan properly.
Call up resellers in your area to sell your overage, ask fellow manufacturers what they do with their overstock, or hire a consultant to help you figure this out. When you’re done, take a deep breath and pat yourself on the back. That was the hardest part of this whole process.
- Track your productive inventory in real-time
After you’ve cleared out your space, you’ll need to start collecting information on how you use the remaining space you have. This is one of the most critical steps to ensuring that you take care of your excess inventory problem for good, because it is only with real-time data that you can adjust your pick, pack, and ship process in an agile manner that meets the expectations of your modern consumers.
- Assess your warehouse
After you understand what your real-time needs are, you can start planning for total optimization. This could mean reorganizing your shelves, procedures, equipment, and technologies. To complete your assessment, you can either engage in research on your own, or if you’re interested in finishing this step quickly, you can ask the experts. Here at Scanco, we’re happy to help you with a warehouse site survey or consultant walk-through that gets you on track.
- Reduce or eliminate inventory errors
One of the main ways that inventory pileups happen is through inaccurate counting and re-stock processes, often due to human error. Today’s increased holiday manufacturing and distribution needs have created labor strain during these critical times, and it’s becoming harder and harder to maintain a year-round, properly trained workforce. When your workers aren’t fully trained, you’re likely to end up with more inaccurate orders, longer wander time through the warehouse, and increased levels of damaged goods.
Luckily, there’s a way that time-strapped distribution operations can avoid these challenges through the use of:
- Voice-activated picking software – increases pick speed
- Barcode verification – improves order accuracy
- Real-time warehouse tracking – ensures accountability for all workers at all times
- Streamline your manufacturing process
Once you know your real-time inventory flow and you’ve reduced the possibility of human error in your warehouse, you may want to consider modifying your manufacturing process. Modern technological advances have improved the accuracy of pull-based systems—such as make-to-order—and many companies, large and small, are taking advantage of this lean manufacturing method to reduce the excess inventory in their warehouse.
Though some manufacturers may want to adopt a full Just-in-Time (JIT) system in which orders automatically trigger everything from raw materials ordering to job planning, other manufacturers may simply choose to reduce their inventory stock space by creating a hybrid of make-to-stock and make-to-order models, powered by real-time, error-free insight into their current stock levels.
Address Your Inventory Needs and Increase Your Profits
Returned, excess, or overstock inventory is an all too common problem in modern manufacturing because no one knows what to do with excess inventory in the warehouse. It doesn’t matter whether the excess stock came from old, error-filled demand forecasts or long-solved QC problems—those problems are in the past. What matters now is the more old inventory piles up, the less space there is for new, profitable inventory.
If you’re a manufacturer with too much excess inventory in your warehouse, it’s time to roll up your sleeves and tackle this problem for good. Kickstart the process when you contact Scanco online or call (877) SCANCO-1. We’re happy to help.