Archives for November 2021

Inventory management is one of the most important systems of any business structure. Keeping a close tab on how your stocks move—from the moment they are bought and manufactured to their storage and sale—plays a key role in tracking the lifecycle of your products or services. That’s why it’s crucial to have an effective and systematic approach to this process.

An accurate inventory management system enables companies to govern real-time inventory conditions, plan and order stock items better, and process orders promptly and correctly.

Inventory management can be tricky and challenging for businesses that are yet to find an efficient and systemic flow managing this process. But fortunately, you’re at the right place. The visual graph below illustrates some inventory management tips along with handy inventory management software tools you can try for your small business.

Top Inventory Management Tips

Accurate and effective inventory management practices can help boost your business profitability and sales. So, make sure to keep these practical inventory management tips in mind.

• Monitor and audit your inventory

Using systems like barcode scanners helps you track the number of stocks and their accompanying information accurately. Scanning your goods puts them in your inventory system, allowing you to keep track of which items are running low on supply or products you have an excess of.

• Do proper warehouse management

A disorganized warehouse is a recipe for mismanagement and a whole lot of inventory headaches. Proper warehouse organization and management are crucial to accurate inventory procedures. Do regular housekeeping and sorting to ensure all products are in their proper places and stocks are well-maintained.

• Do the 80/20 inventory rule

Know that 80% of your profits are from 20% of your stock or products you carry. A good inventory management system and practices can help you determine which items are the most profitable. Find out how many of each item you have to sell weekly or monthly and keep an eye on those numbers to manage them efficiently.

• Understand the ABC analysis

For more efficient inventory and warehouse management, the 80/20 inventory rule serves as a guide to categorize your inventory into three classifications: A, B, and C.

Category A: These items generate the most profits and make up 20% of your stock, even if they don’t sell as regularly as others.

Category B: These may not be as valuable for your business (e.g., less expensive items), but they still sell well, so it’s worth keeping them in stock.

Category C: While these may not be high-value and high-margin items, they sell consistently.

• Have emergency plans

Inventory management ensures you that your stocks are at proper levels. However, that doesn’t mean you’re immune to emergencies like shipping delays or stock shortages. That’s why it’s best to prepare for cases like these. Make sure to allocate a budget for extra rush shipping fees and supply replenishment.

• Liquidate excess inventory

Your storage space is valuable real estate, so it’s important to keep your warehouse with high-demand items or products that sell out regularly. If you notice dead stocks or surplus inventory sitting in your warehouse for far too long, consider putting them on sale or giving them away as freebies.

Alternatively, you can sell excess inventory to surplus companies to help you free up space and obtain capital for your business.

Related Post: How to Liquidate Your Surplus Inventory?

Inventory Management Software

Selecting the right kind of inventory management system for your small business can be difficult. Here are several solutions you can consider to replace your outdated tools and see an increase in profits.

• Ordoro 

Ordoro is a budget-friendly inventory management solution that acts “as a control center for all matters inventory.” It’s ideal for dropshipping businesses, as it allows them to take and process orders within the software through the Vendor Portal. It also has a stock alert feature, where you get alerted when stocks of certain items are low.

• Zoho Inventory 

This tool lets you monitor every order and stock in your inventory, so you have a good idea of the movement of the items for more efficient business management. In addition, Zoho Inventory has a multi-channel inventory management structure, enabling you to set up your Amazon, eBay, Etsy, or other pages and run your business in one place.

• QuickBooks Commerce

QuickBooks Commerce does a great job at monitoring and generating reports about your sales and inventory. Its Advanced Inventory feature lets you track real-time your inventory items and provide insights about inventory management. Apart from these, it also has unique features like expense tracking, tax calculation, and invoicing.

• inFlow Inventory 

This easy-to-use inventory management tool makes the task of keeping tabs on the items that come in, stay in, and come out of your warehouse a lot easier. It offers handy features for barcoding, manufacturing, purchasing and receiving, stock tracking, reordering, and more.

• Upserve 

Upserve is another inventory management solution, but this one is targeted at food businesses. This software lets you run your back-of-house more efficiently while helping you cut back on food costs, reduce waste, track expiration dates, and speed up your inventory with barcode scanning.

• SellerCloud 

Take better control of your inventory with SellerCloud. This all-in-one software tracks your items across all channels, from manufacturing to distribution. Besides managing incoming orders, the tool also gives an alert in case of low stocks.

• Cin7 

Cin7 puts your sales channels, stock locations, workflows, warehouses, shipping, accounting, and more in one connected source, so your inventory, warehouse operations, and other aspects of your business can work more efficiently. This tool also offers inventory tracking, barcode scanning, and order processing.

• Fishbowl Inventory

This inventory solution integrates and automates your business processes for improved efficiency, including inventory management. The tool lets you track your stocks with serial numbers and expiration dates across multiple warehouses, use barcode scanners for accurate records, and keep your inventory and accounting records in sync, among others.

Take Better Control of Your Business

Having too much of certain items or too little of high-demand items can bring your business down. That’s why it’s crucial to have an effective system that helps you keep track of your stocks and allows you to employ better inventory planning and control to improve your business management and health positively.

If you realize your inventory got a little out of hand and need to liquidate excess items, check out Surplus Inventory Buyer. We purchase surplus inventory and ensure you get as much money in return. Get in touch with us today, and let’s see what we can do with your excess inventory!

When it comes to managing your inventory, keeping too many products on hand at once can cause you more significant loss than gain. This is because several factors can get in the way of your sales.

Apart from reducing your available cash flow, a customer’s buying habits often change quickly. At the same time, sales are not always guaranteed despite the quality of the products. They can be affected by ongoing trends or the availability of more superior products. It’s best to rethink your strategy and keep a certain level of inventory at a time.

While excess inventory buyers can help address surplus problems, businesses still often find themselves at a loss on what to do with the stock they cannot sell successfully.  

What is Surplus Inventory? 

Surplus inventory refers to any excess products or items that remain unsold or unused because of inaccurate demand forecasting. These extra items are often not anticipated to be sold by their expiration date and become wasted products. 

Why Do You Need to Avoid Surplus Inventory? 

Being unaware of the general number of products you sell on average can lead to excess amounts of unsold inventory, which can quickly become a liability to your business. If you don’t maintain proper management over this and stock up on too many products in your storage facility, you risk experiencing some of the many disadvantages listed below.

1. Waste of storage space

Having excess amounts of unsold products in your storage facility can leave you with little to no space for inventory that may sell more quickly. At the same time, it also prevents you from taking in other products that you urgently need to help your business grow. 

2. Increase in carrying cost

While you can always buy bigger storage space for your unsold inventory, these facilities still require a hefty fee for you to use freely. Since you are unable to sell some products, you end up losing more money in the process. 

3. Product value depreciation

Your products would not always remain at the same selling value as what you originally bought them for. As time goes by, newer and more improved items will replace your stock, which means that you end up losing more money even if you manage to sell it later on. 

4. Product expiration or deterioration

All consumable goods are regulated by several laws that state when it is allowed and not allowed to be sold anymore. Having an excess inventory of food, medication, and other consumables and selling them past their expiration date can cause major legal issues.

5. Change in demand

Consumer habits constantly change based on current market trends and time. When you have surplus inventory, adjusting to these changes so you can sell them can be more difficult. 

6. Revenue loss

The lack of income hits all aspects of your business and prevents you from moving forward and growing. Without revenue, you cannot provide a budget for your operational costs as your surplus inventory interferes with your plans.

How to Avoid Surplus Inventory

There are many ways you can avoid surplus inventory and gain better control over the products that you sell. Here are some methods you can try.

1. Monitor your inventory

Having someone keep a close eye on your inventory status can keep you from buying too many stocks of one product at once. At the same time, you also gain a better idea of what your inventory looks like at all times.

2. Plan the demand and forecast accurately

Look at your usual sales in the past and analyze the general buying behaviors of your customers. For example, if most of your inventory is sold at a particular time of year, adjust your purchasing routine in a way that meets this demand so that you only need to buy enough that you can sell.

3. Analyze historical data to identify the causes

Before you can start solving your inventory problems, you first need to figure out what factors are causing it in the first place.

Based on data you’ve gathered from previous sales, take a look at details that may indicate why a product is not selling as well as it should. This can be anything from major competitors, product quality, relevance to a consumer’s needs, etc. 

4. Liquidate your surplus inventory

If a product isn’t selling as well as you would have hoped, you can re-market it as something more refreshing using a new marketing strategy. These can be in the form of sales, bundled items, or even as freebies. 

Think Before You Buy

There is a truth in the old saying, “too much of a good thing can be bad for you,” in this situation. When running your business, you need to be careful about each step you take, including handling your inventory. 
If you need a quick solution to your surplus inventory problems, reach out to Surplus Inventory Buyer today. Get a quote now!

One of the first things that come to mind regarding businesses is sales. Since business revenue largely depends on sales, it’s understandable that it receives more focus than any other area in day-to-day operations, including inventory. But forgetting inventory can be counterproductive, as can this part be converted into sales to drive profitability.

Failing to manage your warehouse items could mean losing a significant portion of your company’s earnings to inventory carrying costs. If you’re not familiar with the term, here’s everything you need to know about inventory carrying cost—what it is, why it is important, how to calculate it, and how to maintain it at healthy levels for your business.

What is Inventory Carrying Cost?

When you account for the money you need to spend to store or hold your physical products in stock, that’s your cost of carrying inventory. Also known as inventory holding cost, it represents expenses related to warehousing, employee salaries, insurance, and damage, among others.

Ideally, your inventory carrying cost should be 20%–30% of the value of your on-hand inventory. For example, if your inventory’s average annual value is $100,000, the cost of keeping it should not exceed $30,000.

Your inventory carrying costs—or simply carrying costs—can be a great source of information regarding:

Profit. Based on your current inventory, you can get an idea of how much profit you’ll make once you convert it into cash through sales.

Production. By looking into your inventory holding costs, you’ll know if there’s a good balance between company revenue and expenses. Then, you can determine if you need to increase or decrease production to address any imbalance.

Staying on top of your carrying costs is therefore vital in improving or maintaining business sustainability. Yet, studies indicate that more than 65% of companies calculate their inventory holding costs based only on rough estimates instead of actual computations. It’s also common for companies to stock up to four weeks’ worth of inventory to ensure they won’t run into problems in their supply chain.

However, it can be equally challenging to deal with potential losses from excess inventory.

The 4 Main Components of Inventory Carrying Cost

Learn what exactly comprises carrying costs. With that knowledge, you can better identify how much of your money goes where in holding inventory.

1. Capital Cost

This makes up the bulk of inventory carrying costs. Here, you should include the amount of money you used to acquire goods and pay any interest that came with the purchase. The monetary value lost when cash is converted into inventory also counts as capital cost.

2. Storage Space Cost

The expenses you incur in managing a warehouse fall under this category. Part of those expenses—which can be fixed or fluctuating, depending on certain factors like the amount of inventory and warehouse ownership—may include the following:

• Rent or purchase of warehouse space. This monthly expense is necessary to let you store your inventory all in one place.
• Utilities. Lighting, air conditioning or heating mechanisms, water supply, and the like are services essential in organizing and managing your inventory. 
• Workforce. Salaries used to pay your warehouse management staff also involve costs.
• Security system. You’ll need to safeguard your stock inventory by hiring security personnel or installing surveillance video systems.
• Handling fees in moving items in and out of storage. This includes all the costs associated with fulfilling sales orders: preparing the invoice, printing the shipping label, packaging the product, and so on.

3. Inventory Service Cost 

This covers expenses such as taxes and insurance premiums needed to comply with government regulations and provide general protection for your inventory. Software and hardware expenses also form part of your inventory service costs, as you need these tools to perform regular inventory management and monitoring processes.

4. Inventory Risk Cost

Holding stock comes with risks, and this is where inventory risk cost comes into play. Products may be mishandled or unaccounted for, get stolen, or incur damage due to disasters or other uncontrollable factors—all of which can result in shrinkage. This means you no longer have a saleable product in your hands, causing you to lose money.

Inventory risk costs also account for when your inventory’s value depreciates. Perhaps your product line has a newly released version or model. Your current inventory will then fetch a lower price than its original value. Finally, you need to factor in obsolescence or the risk of your inventory becoming obsolete. This applies to goods that have sell-by or best-by dates, making them difficult to liquidate.

Whatever the case may be, the cost of any of these inventory risks can negatively affect your bottom line.

How to Calculate Your Inventory Carrying Cost? 

Now that you know the main components of stockkeeping, you can easily calculate the inventory carrying cost with this formula:

Inventory Carrying Costs = Cost of Storage ÷ Total Annual Inventory Value x 100

This formula can be represented by these steps:

Step 1: To determine the cost of storage, add the expenses for each of the four components: capital, storage, inventory service, and inventory risk.

Step 2: Divide those costs by total inventory value—this is the cost of your inventory multiplied by the number of available stocks.

Step 3: Multiply the number by 100 to get the percentage of inventory carrying costs. As mentioned previously, the ideal range is 20% to 30% of your current inventory’s value.

Suppose your depot’s annual inventory is worth $100,000 with the cost of storage at $20,000, broken down into four areas:

• Capital costs: $10,000
• Storage space costs: $4,000
• Inventory service costs: $4,000
• Inventory risk costs: $2,000

Now, you can apply the formula.

Cost of Storage ($20,000) ÷ Total Annual Inventory Value ($100,000) x 100

= 20% Inventory Carrying Costs

Having a 20% carrying cost is within the acceptable range. If you go beyond 30%, you must look for ways to cut your inventory carrying costs.

How to Limit Inventory Carrying Cost

Reducing the cost of your inventory begins with these steps:

1. Understand your reorder point

Reorder point simply means the time in which you need to replenish your stock. Besides knowing when to order, it’s also vital to purchase the right amount of inventory. High inventory levels can lead to obsolescence, while running out of stock may result from pushing for low inventory levels.

To ensure there’s balance in your reorder processes, keeping track of your sales volume is a must. You can review your past month’s performance to look for sales patterns. Alternatively, you can set a reorder point based on what’s being done by businesses with sales models or cycles that are similar to yours.

2. Organize or redesign your warehouse space

A poorly organized warehouse is a recipe for disaster, as it increases the likelihood of misplacing or damaging your inventory. If you have a huge warehouse, the time it will take for your staff to retrieve a major piece of inventory might only add to your cost of inventory risks.

Strategies you can implement to add efficiency into your warehouse design include sorting slow- and fast-moving items, color coding areas, using stock-keeping unit (SKU) labels, and the like.

3. Forecast accurately

Forecasting involves determining your inventory needs based on market trends and demands. You want to address customer expectations by ensuring your inventory has an adequate supply of the products most consumers are interested in while being lean on slow-selling items.

Here, you must look into both your warehouse records and sales reports. You can get a wealth of information from these documents—including how much inventory you have or how your business has been performing—and use that to come up with accurate forecasts.

4. Reduce supplier lead time

Supplier lead time refers to the period it takes to receive purchases from third parties. A reduced lead time can contribute to a lower inventory cost by allowing you to order less stock but with more frequency.

So, even if you have large shipment needs, you won’t have to look for a major warehouse with a lot of storage space because you’re confident your supplier will deliver even with shorter lead times.

5. Use an inventory management software

An inventory management software offers multiple benefits in bringing down your company’s holding inventory costs. These tools are not only designed to track your purchase orders and sales in real-time but also automate a wide range of processes, including creating and updating the product listing in the system, printing shipping labels, and inventory reporting, among others.

6. Liquidate excess inventory

Sometimes, a surplus in your inventory can’t be avoided. Perhaps the busy season has ended, and it won’t be until a few months or so before things pick up again.

Rather than let your excess stock sit and collect dust in your warehouse, you can work with companies that will let you offload your deadstock. This way, you can free up valuable space in your warehouse and reclaim some of your capital costs.

Related Article: How to Liquidate Your Surplus Inventory?

Limit Your Inventory Carrying Cost

Good inventory management plays a major role in a company’s growth, stability, and sustainability. It lets you hit the sweet spot between reducing the costs of operating your business and making your product available to customers when they need it.

For proper management of your business assets and additional profits, consider selling overstock inventory to Surplus Inventory Buyers. Learn more about our inventory liquidation services. Contact us now! 

Surplus inventory can sometimes turn up due to factors beyond your control. Perhaps your demand forecasts didn’t pan out as you hoped they would, or maybe there was a sudden change in the market trend. Whatever the case, having excess stock is a no-no for any retailer or business.

In addition to taking up space in your storage room, surplus inventory ties up cash flow and prevents you from re-investing in your business. That’s why staying on top of your inventory is crucial, as it prevents your goods from deteriorating in value. In turn, it helps maximize profit opportunities. 

So, how can you quickly get rid of your excess stock? This post will discuss some ways on how to liquidate inventory. It will also provide practical tips for faster inventory liquidation. 

7 Ways to Quickly Liquidate Your Surplus Inventory

1. Offer in sales or at discounted prices

One of the most popular ways to liquidate inventory is to do it the old-fashioned way. Consider offering something customers can’t ignore, like discounts. You may want to sell certain items at 20%, 30%, or even 50% off. Alternatively, you can offer a “buy one, get one” deal to encourage buyers to avail of the sale.

Another method is to offer bulk discounts during the holidays when customers are likely to purchase multiple items. This can help move large volumes of excess inventory, speeding up the liquidation process. 

2. Sell online

Having an online store allows you to reach more potential customers, increasing your chances of liquidating your surplus inventory. There are ecommerce website builders you can use to set up your virtual shop, such as Shopify, Wix, and BigCommerce. Creating an account with these platforms is simple and easy, not to mention they include powerful features that let you track your sales data.

You can also choose to sell your products on third-party platforms like Etsy, Amazon, or eBay. Or, you can try using location-based platforms like Facebook Marketplace, Craigslist, or OfferUp to attract more local traffic. If you’re in for a more robust solution, WordPress has a comprehensive range of ecommerce tools as well.

3. Bundle the items or sell in bulk

Product bundling is another way to liquidate your excess inventory instantly. You can pair popular products with regular ones and then sell them for a cost lower than their individual prices. You can also offer special edition bundles for holiday promotions, where you pack multiple items and offer them at a marked-down price. 

Alternatively, you can sell the excess inventory in bulk. Since bulk items come with discounted rates, retailers are more likely to buy your surplus goods. This will allow you to liquidate your surplus merchandise without taking a big hit on your profits.

4. Use as rewards, giveaways, or incentives

Providing incentives encourages buyers to increase their basket value in exchange for special perks. To offload excess inventory without losing a substantial amount of revenue, consider creating a promo and offering the surplus products as rewards. For instance, for every purchase worth $100, the shopper gets an extra item or two for free. 

You can also come up with a “Shopper of the Week” feature where you offer surplus products as rewards. This helps liquidate your excess inventory faster while still bringing in profits.

5. Consider pop-up shops

Often described as temporary retail, a pop-up shop creates a sense of urgency and exclusivity, driving action by prompting customers to take advantage of the limited-edition products. While it may sound daunting, setting a pop-up shop isn’t that difficult. But just like launching a regular store, you need to thoroughly plan if you want your pop-up store to be profitable.

When deciding on a location, be sure to consider the demand in the area. Ideally, you should look for a place with a strong market. Shopping malls are often the first choice because they give you access to the best kind of traffic—people looking to spend their money. 

Mobile pop-ups are also possible, enabling you to sell your products in locations where buyers frequent and helping you maximize your market reach. Perfect for retail businesses, pop-up shops are a great way to introduce your products to new customers and quickly sell your excess inventory.

6. Donate

Donating can be an effective way to generate brand awareness. Depending on the product, you can send your remaining inventory to your local homeless shelter. For instance, the National Association for the Exchange of Industrial Resources (NAEIR) takes and redistributes donations to schools and nonprofits across the country.

Apart from letting you help others in need, donating likewise allows you to avail of tax deductions. Plus, it’s a strategic approach to building a positive reputation for your brand.

7. Sell to excess inventory buyers

Another way to liquidate your surplus merchandise is to sell them to liquidation experts, such as Surplus Inventory Buyers. Since they specialize in taking excess stock out of merchants’ hands, you can be certain that your remaining inventory is properly liquidated. This will free up storage space for your new products and help you maintain a healthy cash flow.

Liquidate Your Excess Inventory, Maximize Your Profits 

Liquidating your surplus inventory helps facilitate your business’s cash flow, helping you maximize your profits. It also frees up storage space, allowing you to bring in new products for increased revenue. 

If you’re looking to liquidate your excess inventory, consider selling them to Surplus Inventory Buyers. We handle the whole process—from pricing your assets to arranging for a pickup. Get in touch with us to know more about our inventory liquidation services!