Overstock has many causes, including inaccurate inventory counts, bad item tracking, shifting customer behavior, seasonal variations in demand, inflexible suppliers, or bad sales forecasts. Using different inventory reduction strategies is one of the best ways to deal with overstock, maintain a smooth cash flow, and reduce the cost of carrying goods. Ultimately, inventory reduction can have a positive impact on your returns associated with inventory control and management.
- Use Proven Inventory Control Methods
Cycle counting and safety stock management and two of the most cost-effective inventory control methods that can help you reduce inventory. Because their effectiveness depends to a large extend on the quality of your data analysis, carrying them out effectively becomes easier if you use a specialized e-commerce inventory management app. Before using any of these methods, you may want to perform an in-depth analysis of your data and then create and enforce best practices for your inventory team.
- Identify Obsolete Stock and Sell It At a Reduced Price
Although this strategy impacts your short-term profits, it is often necessary. Whether it is caused by changing demand patterns or inaccurate purchase orders in the past, obsolete stock is easy to identify if you use an e-commerce inventory management app that can track and measure the performance of every product in your stock across locations.
- Optimize Purchase Orders
The goal is to satisfy demand without carrying extra stock. Equipped with a small business inventory forecasting app and purchase order and vendor management tools, you can eliminate guesswork and order the right quantities at the right time. Another feature that could help you is re-order automation, which keeps your stock replenished as soon as inventory levels drop below minimum levels.
- Keep Your Inventory Control Centralized
It’s easier to prevent overstock than it is to eliminate it, which is why inventory centralization is so important. By unifying and consolidating your inventory data, you can create a more comprehensive and realistic inventory plan, together with safety stock levels.
Automated software can help you do this better than any manual inventory centralization strategies. Ideally, you will want to use an accounting inventory software that integrates with your sales and accounting data and can make all your inventory data easy to access from any locations to users with the corresponding access rights.
- Improve Your Relationships with Suppliers
Maintaining positive relationships with suppliers often increases the flexibility of your purchase orders, leading to better supplier lead-times and lower carrying costs. The first step is to use a purchase order and supplier management solution if you don’t use one already to track supplier data more efficiently.
With that understanding, you will know where to put the largest share of your inventory money, which can help you build loyalty and eventually negotiate more favorable terms with suppliers, as well as what suppliers to use less or drop altogether.
Lastly, make sure you choose the right e-commerce inventory management app for your needs, comparing carefully features against pricing to determine whether you’re getting enough value for your investment. DataQlick is one cloud inventory control app that packs a lot of features, including re-order automation, forecasting, purchase order and vendor management, invoicing, and sales reports and analysis. Find out more.