As it comes time to declutter and reorganise your production line, assessing your manufacturing inventory management habits should be a top priority to reduce future excess inventory and ensure your business is running at its full potential. However, if you have redundant stock you still need to clear out, here are some tips on dealing with excess inventory in the manufacturing industry.
Return or trade excess product
With raw and untouched materials, suppliers may be able to offer a refund, discount, or credit for product returns. If this is the case, your business will bear the weight of shipping and handling, but you will no longer have capital tied up in excess stock and can instead invest in usable materials. Alternatively, if you can’t return your excess, consider trading it within the industry. Other manufacturing companies may be able to put excess stock to good use, and this will build relationships between companies.
Find new uses for materials
While you may not need materials for the product they were originally intended for, your business may be able to use the excess stock for other production lines. While the excess product may need reworking to become appropriate for the new production line, it is still worthwhile finding other uses for stock that will otherwise go to waste.
Liquidate excess stock
In cases where your business cannot find other uses for excess product, liquidation may be the best option. In this type of agreement, a liquidator will buy your excess stock at a negotiated price. It won’t increase your profits, but it will deal with stock that is otherwise redundant.
As customers grow more environmentally conscientious, businesses that clear excess inventory in an environmentally friendly way are more likely to retain good customer relations. While some items cannot be put to better use and need to be scrapped, other products can be recycled. Instead of disposing unneeded items, recycling is a much more sustainable option for businesses concerned with their environmental impact. Similarly, if stock is of use to others outside of the manufacturing industry, offering excess as donations to not-for-profit organisations is a conscientious way of reducing redundant materials.
Once excess inventory has been taken care of, focus on the reorganisation of manufacturing inventory management can ensure less waste in the future. As businesses grow, most invest in inventory management software, allowing for more accurate and up-to-date data regarding stock levels. This can also improve forecasting accuracy, allowing for more stability and avoiding stock outages or pile-ups.
Tracking inventory in real-time allows management to know exact supply levels, letting them stock accordingly and avoiding excess purchases. Tracking of product can be simplified with barcode scanners or similar software to identify product labels as they shift throughout a warehouse. Analysing what materials enter and exit the warehouse will optimise insight into stock levels and allow for adjustments to be made that save your company money.
Eliminate inaccuracies through error
In terms of stock taking strategy, manufacturing inventory management can encounter serious issues due to inaccuracies in data through errors. Whether it be inaccurate counting, restocking supplies that haven’t been accounted for, or general human error, overstocking tends to be an issue of inaccurate data. To avoid this, it is important to instil a standard stock taking procedure that must be followed each time inventory is counted. In attempts to avoid human and counting error, taking advantage of barcode technology and tracking software can streamline the stock taking process and avoid inaccuracies, allowing for better manufacturing inventory management.
Optimise warehouse space
Taking advantage of warehouse space is a largely overlooked part of inventory management procedure. Organising shelf space can make it easier to find specific items, create room for more stock, and ensure products don’t get damaged.
After a thorough clear-out of excess stock, it is important to maintain a high level of manufacturing inventory management to ensure stock levels remain optimal in the future. For any industry managing stock, it is important to avoid overstocking and keep inventory levels as lean as possible to avoid idle inventory. As a business, having funds tied up in redundant inventory isn’t a productive use of assets, and therefore clearing excess stock is a must when optimising manufacturing inventory management.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.