A product, be it of any variety, has a certain life cycle, which begins when it is newly launched into the market, and ends when it finally loses the majority of its demand among the customers. The very final stage in the life cycle is when the product is no longer in as much demand as it was when it was experiencing a surge in popularity and when it is on the verge of becoming a liability for the company that produces and stocks it.
In such a case, if the company, and more importantly, the inventory managers within the company, do not keep track of the remaining demand of the product in the market, it will tend to pile up in the inventory, in the form of obsolete stock. This can result in a major hassle in the long term, since the inventory will gradually have lesser space for new and growing products, which are obviously more valuable.
Unfortunately, it has been reported that about 48 percent of small to medium sized businesses do not possess an effective inventory data management system. This is a shocking statistic; certainly one that highlights the seriousness of the issue.
Inventory Management 101: How to Manage the Obsolete Stock
To that end, following is a useful and comprehensive guide to managing your excess inventory while making sure that costs do not stack up due to the management process itself.
1. Liquidate the Excess Stock
A lot of the companies that possess obsolete stock tend to hang on to it, in the hopes of profiting from it on a later date. This is very unlikely in today’s market, especially since the market is more competitive than ever before, and there will already be a new product in the market by the time the company comes up with a marketing scheme to sell the remaining stock.
It is always more productive to sell the remaining stock promptly, before it begins to take valuable warehouse space.
2. Have Effective Stock Management Policies
Having excessive obsolete stock should be avoided altogether, since liquidating stock can often result in a small loss for the company. This is also why the inventory should be managed efficiently from day one, and stock management policies should be in place to avoid the stock from piling up during the decline stage of the product life cycle.
3. Build up Last-Resort Marketing Strategies Beforehand
It is always better to have a marketing strategy built up beforehand for when you have excessive stock lying around and want to get rid of it. This will help in avoiding the stiff competition that your last-minute strategy might face, since you will have more time to think about it. It would be even better to have a strategy planned out during the earliest stages.
4. Use an Inventory Management Software
An efficient way to manage the inventory is to utilize inventory management software. Such software can prove to be an effective inventory data management system, since it will likely automate and/or digitize the entire process.
Good inventory management software, such as the one offered by CStorePro can help you with your inventory data management par excellence. Click here to schedule a demo.