When you are a manufacturer, inventory is always on your mind. You don’t want to produce too much inventory, but you don’t want to have too little either. In theory, with the right calculations and demand predictions, you shouldn’t end up with excess inventory. However, real life is different to theory. Unexpected events happen or consumer demands become harder to predict. In reality, it is likely that a there will be excess manufacturing inventory left over at some point. When this excess occurs, it’s important to be strategic with the extra manufacturing inventory. After all, it is still a very big asset for your company. You need to leverage as much profit as possible despite the situation.
Here are a few strategic options to help you get rid of excess manufacturing inventory to make the most out of the situation.
Use the inventory for other products
Sometimes the inventory can be stripped for its raw materials. If you are proactive and creative, you can use components from the old inventory in other ways. Raw materials can be re-used in other parts of the manufacturing plant or used in one of the manufacturer’s other plants. If the resources are there, new products can be created from the old inventory. Not only will you be able to recycle the material, but you can repurpose it as a new product that might attract buyers.
By reducing the price, it might be easier to entice buyers. These buyers can come in all different forms. Perhaps you want to have a bulk discount rate to one of your direct distributors. The bulk price gets rid of your excess inventory and the distributor also gets a good deal.
In addition, you can reduce your price to the end consumer. Let’s say you have a bunch of unused bikes that are two years old. Some consumers want the latest and greatest model. However, some consumers are more price conscious. They will happily accept an older model if it meets their price point. A little bit of compromise from both parties can mean that both sides end up benefitting from the sale.
Sell it at auction
There are copious online platforms where goods can be sold. You can either try to sell the excess inventory as-is or you can market some of the raw materials if that is more desirable.
Bear in mind that this is can be a time-consuming process. Taking photos, uploading information, monitoring auctions and getting the goods delivered will take time. Additionally, not all goods will sell at auction. However, it is worth a shot if you’re aiming to get rid of as much inventory as possible.
Donate your excess inventory
If you are really having difficulty selling your excess inventory, a different option is to donate it. By donating your inventory to non-profit organisations you can help others who made need these resources but cannot afford it. Depending where your company is located, there are often tax credits for these kinds of donations.
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.