Excess Inventory, The Doomsday Scenario

Excess Inventory? See What Talon MC & Liquidation World Can Do For You!

A Grainger video about inventory solutions, maintaining inventory, maintenance, repair and operations and keepstock.

A Grainger video about inventory solutions, maintaining inventory, maintenance, repair and operations and keepstock.

Slow moving inventory is often seen as an easy target for people undertaking an inventory review.

What to do instead of scrapping inventory

When inventory liquidation is a bad idea

You have excess or slow moving inventory and you want to get rid of it. When does this make sense and when does it not make sense?

Some industrial, mechanical, or machine parts should not be discontinued or liquidated even if the sales of these products is slow. Any part that is vital in the functioning of a machine, needs to be available to customers if and when they need them. One part that is broken on a complex machine can make the machine unusable.

These critical parts need to be kept for possible use by customers or distributors since that is part of servicing the customers and machines that are sold. If you think it is costly to keep slow moving critical inventory, please compare that to doing a new manufacturing run for that part.

Besides being expensive and generating MORE slow moving inventory, don't forget time. Many critical machines cannot be down for long periods of time.

A better idea is to use a GPS inventory bank for critical parts... They store the parts for you and you can access them when you need them for a minimal fee. You don't pay for storage of inventory, you only pay if you need a critical part.

See the inventory bank info on this page for more info

Slow moving inventory solutions

This article has an interested statement, though in the end we think we have a better solution for some slow moving inventory.

As a rule of thumb, we figure that the expense of maintaining goods in inventory averages about 2 percent of the cost of those goods each month. If you carry an item in stock on the shelves or in a warehouse for a year, you're down 24 percent. There aren't many businesses that can overcome this kind of a cost handicap even in the best of times. When business is bad, a slow moving inventory can be a killer.

Dispose of Wholesale Surplus Inventory and Slow Moving Inventory

http://www.morebusiness.com/running_your_business/profitability/tip15.brc

The article then talks about junking inventory and selling it at a distress sale. I think that might apply to some goods, but any sort of industrial parts that may be needed in the future by customers should not be sold at a loss or junked, it should be put into an inventory bank.

Inventory Management terms defined

Slow Moving Inventory - inventory that has little or no current usage;
sporadic movement
Excess Inventory - inventory that is in excess of the forecasted demand.
Obsolete Inventory - inventory that has been superseded by newer items.
Non-Moving Inventory - no demand inventory

Inventory Bank - a third party company that purchases excess & slow moving
inventory and makes it available for sale to fulfill future product needs.

Surplus Outlet - a company that purchases excess inventory, often at a
fraction of its cost, and resells it into the open market, often competing
directly with the OEM and its customer.

Excess Inventory according to wikipedia

http://en.wikipedia.org/wiki/Excess_inventory