Each company has its own set of strategies, KPIs, metrics, and inventory management methods. However, the challenges and problems that businesses face when dealing with inventory are frequently the same, and they can affect any size business.
What exactly is excess inventory?
Excess inventory is a product that has not yet been sold and exceeds the product’s projected consumer demand.
Over-buying, inaccurate projections, canceled orders, a bad economy, unforeseen weather changes, unpredictable consumer demand, or late or early delivery of goods are all examples of stock demand mismanagement.
Why is there excess inventory?
Excess inventory can be caused by a variety of disruptions in the product cycle. These elements can be classified into three types:
Shipment delays of 60% – Delays caused by factors such as processing times, order frequency, and international regulations.
25 percent Technical challenges – Problems caused by system integration, purchase orders, EDI processing, and a lack of business visibility.
Other factors, such as returns or quality requirements, account for 15% of the total.
Excess inventory can also be caused by changes in consumer behavior and market trends. Excess inventory can occur in the retail and home goods industries as soon as seasonal trends shift.
Excess inventory is frequently caused by a miscalculation in customer demand in industries that deal with fast moving consumer goods where demand is difficult to predict, resulting in companies over-stocking in slower-moving items.
How does excess inventory affect the environment?
Excess inventory has a significant impact – not only on the bottom line of a company, but also on the environment. Climate change awareness has shone a spotlight on sustainability for retailers and their customers.
With two-thirds of consumers admitting to boycotting brands that do not share their personal beliefs, businesses have an added incentive to manage the environmental impact of their excess inventory from both a reputational and an ethical standpoint. Finally, customers are more likely to return to a brand that actively seeks to account for and limit its environmental impact. To do so, brands must first identify the environmental risks associated with their industry’s excess inventory problem.
Overstocking of perishable food has resulted from having too much inventory on hand. The waste has exacerbated the global crisis.
Globally, 33 percent of all food produced is lost or wasted each year, with root crops, fruit, and vegetables accounting for 45 percent.
The United States is the world’s largest contributor to food waste, spending approximately $161 billion on food that will never be eaten, with the average American family of four wasting approximately $1,500 worth of food each year.
Excess inventory in the food industry has moral and environmental implications in addition to financial implications. A quarter of all greenhouse gas emissions are caused by the food industry, with food waste accounting for one-third of this total. When food is thrown away, all of the resources used to produce and transport it are also thrown away.
Overstocking in the beauty industry has resulted in an overabundance of expired products in unrecyclable plastic packaging, causing economic and environmental problems.
The American beauty industry is the largest in the world, with an annual revenue of $80 million. Beauty brands strive to create a community with their customers in order to ensure that the right products, particularly cult favorites and new releases, are always available for purchase. To meet demand, the always available strategy necessitates high inventory levels in stores, which consumes space and capital.
Excess inventory in the beauty industry can be extremely difficult to manage. Manufacturers are responsible for determining product shelf life as part of their responsibility to ensure product safety; however, it is recommended that unopened makeup be discarded after three years. Excess inventory combined with a relatively short shelf life can result in warehouses full of expired makeup encased in non-biodegradable material. As a result, because these products cannot be recycled, reducing the use of plastic should be a top priority for all beauty brands.
Brand exclusivity and the desire for the latest styles, two defining aspects of the fashion industry, are leading causes influencing fashion sustainability.
As a result of higher turnover in fashion cycles, the fashion retail industry has found itself under enormous pressure to release new merchandise in recent years. As a result, fashion and apparel brands have been at the forefront of the battle against excess inventory. The COVID-19 pandemic has only exacerbated this, with more people choosing to stock up on essential items, leaving the fashion retail industry with rising levels of unsold inventory.
Solutions for unsold items
Excess inventory can be reduced in any industry by implementing the right inventory technology, which allows for more effective supply chain management, cost savings, waste reduction, and a lower overall carbon footprint.
Brands can gain greater visibility over all of their inventory and access historical data on past performance with a centralized system of record. Using this data, brands can gain data-driven insights that lead to more effective go-to-market strategies, allowing them to optimize excess inventory in a sustainable manner.
Companies can also opt for stock solution services such as Ozeol. Offering global stock solutions since 2010, Ozeol is a worldwide supplier of B2B products. Ozeol allows you to sell your inventories quickly, reducing storage costs. Some of our experts have over 20 years of experience in global business solutions for production.
We operate internationally in order to identify surplus stock of finished products including end of collection, changes in packaging, surplus stock, canceled orders, 2nd choice, and etc.
During the past ten years, we have gone limitless to achieve our goals which is to offer you the best solutions for your stock concerns. Ozeol today has more than 200 members in its team thanks to its people who mustered up the courage to take a global perspective and to follow what others would have called “unrealistic ambitions”.
Here’s what to expect from Ozeol:
- Fill the supplier form on our website
- An agent will call you and a sales price will be agreed upon
- We will do a Quality Check
- We take care of the shipment and logistics
- Payment is done