Categories: Inventory Management
By Mark Tomalonis
Principal, WarehouseTWO, LLC
Do you have anything in stock that has been there for more than a year? Two years? Do your inventoried items have Birthdays???
Before an inventoried item has its first Birthday, consider these strategies to get rid of it and recover your investment:
The longer an unwanted item sits in stock, the harder it is to get rid of it. Have a process or discipline that identifies unwanted inventory every month. Doing so will make it much easier to take the suggested actions below. Identifying newly created unwanted inventory every month should be someone’s assigned responsibility.
Who used to buy this item? Try to sell it to them. Reduce the price if you have to. Sell it at a loss, if just to recover most of your investment.
Expand the available marketplace for your unwanted inventory by making it available to peer wholesaler-distributors. Your surplus items may have no demand in your local territory. But they might have demand somewhere else in the world. Formalized inventory-sharing among peer wholesaler-distributors can expose your inventory to thousands of potential end-customers through peer distributors in your network. "Inventory-sharing" is what WarehouseTWO facilitates. Learn more here.
Take advantage of every annual/periodic inventory exchange offered by your manufacturers. Returning an item for credit (or in exchange for a like-value purchase of other items) is an easy way to get rid of unwanted inventory. Make sure that you have a formal process and schedule to take advantage of such policies. Managing periodic returns should be someone’s assigned responsibility. Be aware of any limitations to what can be returned/exchanged, such as items whose warranties have expired.
If your unwanted item can be used in place of an active item, create a process or discipline whereby your customer service representatives offer up, at an attractive price, an unwanted item whenever a customer inquires about a similar, active item. WarehouseTWO’s RELATED ITEMS functionality lets your unwanted items appear in SEARCH results when another distributor searches for a similar, more popular item at WarehouseTWO. Ask us how it works.
Disassemble, reassemble or modify an unwanted item to convert it into a more active item. For many industrial products, options can be removed or replaced, and components (such as trim or seals) can be changed.
Using WarehouseTWO’s WEB MARKET functionality, easily expose items to millions of potential buyers, via internet search engines, such as Google. WEB MARKET is easier to use than eBay, and WarehouseTWO takes no commission on anything that you sell through this tool. Ask us how it works.
If you can gain a greater financial benefit than from simply writing it off, consider selling your unwanted items to a surplus dealer who caters to your industry.
Donating inventory might have the same financial effect as writing it off and disposing of it, but a donation benefits a non-profit organization. One of our favorite organization is FIRST, the robotics competition organization for primary and secondary school students. This organization is known to accept fluid power and industrial automation products, to be used in their competitions.
The only guaranteed way to turn excess inventory into cash is to throw it away and write it off. For those of you in the U. S., it’s tax season. How much inventory did you write off for last year? Did you take all of the above actions prior to writing it off? What will you do differently this year?
About the Author
After a successful career in sales and operations management in the wholesale-distribution industry, Mark Tomalonis is now principal of WarehouseTWO, LLC. He amuses himself by writing articles such as this one, to help wholesaler-distributors execute their operations better. Mark’s articles and tips are published in WarehouseTWO’s monthly e-newsletters. Click here to subscribe.
WarehouseTWO, LLC is an independent “inventory-sharing” software tool created exclusively for durable goods manufacturers and their authorized distributors, and for any group of durable goods “peer” wholesaler-distributors, such as members of a buying/marketing group or cooperative. To learn how inventory-sharing with WarehouseTWO can help your business, visit the WarehouseTWO website, or email firstname.lastname@example.org.