By Wesley S. Randall, David R. Nowicki and Shailesh Kulkarni. Additionally, bundling faster moving items with lower performing products provides an incentive for customers to buy your overstocked items while adding real value to their shopping experience. Finding the correct strategy can be vital to reducing inventory, but there are various methods to be considered. Reducing obsolete and excess inventory not only helps manage costs and improve efficiencies, it can also help transform the company’s image. But you can also use your charitable activity to gain free publicity in various relevant publications. SEE ALSO: Four Things Retailers Can Learn From Realtors. Regards, Muddassir, Hi Muddassir, very interesting. Research industry trends, compare companies and get market intelligence every week with Supply Chain 24/7.

In this post, we'll walk you through everything you need to know to get started. And try to work with production folks to reduce this manufacturing lead-time! I am sure there will be many readers who are not from manufacturing industry but from services, will like to benefit from. A little healthy competition can encourage staff to come up with new and creative ways to market your goods. “Advice and counsel from more senior leaders, who are willing to share their insightful sharing of experiences and gives you career guidance and growth tips”. SEE ALSO: How to Easily Determine Your Inventory Turnover Ratio. If you have lack of resource to conduct regular safety stock review, then hire a freelancer Inventory analysis. Furthermore, the inventory management strategies will augment business operations by the effective and efficient flow of goods and services. This way, they get seen more often and customers are tempted to add as ‘extras’ to their purchase. To calculate current stock, or inventory, you can use Excel Tables with a formula based on the SUMIF function. In my experience this is the most effective method of inventory reduction and fast! Even if you subtract the obvious suspects that would make your costs rise – extra rent, extra staffing, upkeep of multiple locations, etc. Turvo. If you are having problems moving a particular product, the problem might not be with the product itself, but rather with how it is being marketed or displayed. Saying these goods are ‘back in stock’ can also create a feeling that they are back by popular demand. In the example shown, the formula in K7 is: = SUMIFS(In [ Qty ], In [ Color ], J7) - SUMIFS(Out [ Qty ], Out [ Color ], J7) Where "In" is the Excel Table on the left, "Out" is the table in the middle.

I really wish Point 2 to 18 somehow become subsets of Point 1, then life will be much easier and simpler as Supply Chain Professionals for us!! enterprise resource planning, They offer a reminder of the discount code at the top of the page, under the image thumbnails and on the pages themselves. Factors that have an influence on this behavior include everything ranging from the complexity of consumer demand for your merchandise, to bottlenecks in the supply chain, to accurately identifying emerging trends in consumer tastes. Starting from up steam of supply chain and map out the average lead-time to down stream of supply chain. We’ll call you right back to explain how ShopKeep can work for you. Thanks very much for your comments Kashif. 2. The Square Root Law states that total safety stock can be approximated by multiplying the total inventory by the square root of the number of future warehouse locations divided by the current number. The obsolete stock is generally hidden in many different places in the warehouse, therefore, no one knows the extent of space being wasted. How to improve resilience, lower costs, and optimize operations with demand-driven inbound supply management. Inventory comprises an important part of current assets, particularly in manufacturing industry. And when they’re rewarded with an added bonus in their next paycheck, they’re guaranteed to keep up the good work. Consider revamping your floor to reposition your lagging inventory to a new vantage point. Therefore reducing inventory as it is only ordered when it is needed (this needs a good supplier rapport and short lead time.). Therefore, it is more that each planner and buyer should have their own individual targets for the production cells they are planning or buyer for raw materials inventory from 1st or 2nd tier supplier. A survey of best practices for inventory reduction is conducted annually by the Inventory Reduction Report, a subscription newsletter for "Improving Logistics and Supply Chain Management."

Inventory planning is a component within advanced planning and scheduling (APS) systems. Just as you are often willing to bend over backward for your customer, so too will your supplier to keep your business. Supplier Affinity Enhancement - Suppliers are extremely important to manufacturing operations - … 32 Etsy Statistics You Need to Know in 2020, The Definitive Guide to Ecommerce Business Loans, 4 Essential Customer Engagement Tools to Increase Your Sales, Veeqo Inc, 801 Barton Springs Rd, Austin, TX 78704, USA. Subscribe to our email newsletter and we’ll keep you up-to-date. While most attention is focused on cars and…. It is brief as well as informative. Make sure you understand it is difficult to analyze safety stock for New Product Introduction, but at this time you have to agree launch quantity. Get Your Excess and Obsolete Inventory Policy Guide Now! Morever, you can download Excess and Obsolete Policy  guidelines for adjustments, disposition, inventory valuation, and reserves.

They are designed to assess the effectiveness of inventory reduction processes as well as the sophistication and breadth of those efforts. issues that can cause a product to depreciate in value. All rights reserved. During my 10 years in supply chain planning, I have found between 20%-25% inventory sits with Top 50 high value inventory items (may vary with different business!). It’s always a good idea to keep a close and regular eye on your inventory management system to see how long stock has been sitting.

How to improve resilience, lower costs, and optimize operations with demand-driven inbound supply management. For me this is the initiative which requires to be more open mind. Enter the percentage you feel applies in your company’s case. It is good to increase the dispatch frequency of finished goods, depending on the flexibility of your production organization. An efficient warehouse is one step closer to a lean warehouse. Logistics Companies - Last-Mile Delivery, Creating a Digital Supply Chain Platform for Real-Time Visibility and Collaboration, Consumer Trust in Social Responsibility Communications: The Role of Supply Chain Visibility, Building Supply Chain Finance Goals with Real-Time Analytics, The Pharmaceutical Supply Chain Reform We’re Not Talking Enough About – Logistics & Transportation, Application Programming Interface Management Ensures Flexibility and Frees Resources. inventory reduction,

I must admit, to implement this mostly depends on the marketing and engineering departments, therefore, one of the more difficult inventory reduction strategies. If you don’t currently have a reward or loyalty scheme in place you should look into it as a priority. Slotting

With unparalleled, Trimble is transforming the way the world works by delivering products and services that connect the physical and digital worlds. Not only does it take up space in the warehouse, mess up cash flow and put a spanner in supply chain management – but attempting to get it sold can also divert attention from other vital areas. There are some great sites like Pop-Up Republic and Go PopUp who will work to organize the entire process for you – including the space, physical address and insurance costs. Thanks! Ordering a smaller volume of inventory, more frequently is beneficial for the company to manage cash flow and also inventory reduction. High inventory has its advantages and disadvantages. Is Your Supply Chain Control Tower an Asset or a Liability? If you work in business where standard cost only changes once per year, you have to ensure that the financial controls are on your side to reflect the cost reduction in piece price! This could be useful, as you don’t have to have expertise in-house to get this analysis done. Unpopular products happen.

Free guides, on-demand webinars, infographics and more delivered directly to your inbox. As we know, the safety stock in employed to absorb lead-time variation and demand variation of customer demand and achieve required service level (95% in in most cases). This is especially critical with A and B items that are part of direct inventory. Turvo. This in turn will reduce the risks related to holding inventory for longer periods of time. The key is to act quickly, the longer you keep excess inventory on hand, the more it will end up costing you. You obviously don’t want to give away your merchandise without turning a profit (if it can be avoided), so begin with an incremental approach such as 15, 20, or 25 percent. Both a reduction in supplier lead-time and manufacturing lead-time will contribute to inventory reduction.

There are some great apps like Smile.io, FiveStars and Belly that can increase a customer’s lifetime value by up to 40%.