You're facing excess inventory and cost-saving goals. How do you strike the right balance?

Analyzing data is key. Sometimes the first data you see is incorrect, so it's important to get into details. The goal should be as such that won't hurt the business results by much. So if we're cutting some SKUs, there should be a plan how to get the same revenues from other SKUs that are already in inventory

In the new era of e-commerce & Quick Commerce, an organisation may explore opportunities to negotiate & utilise their hub warehouses or MFCs (Micro fulfilment centres) based on the demand pattern in a specific region or city. This could be a trade-off between having a temporary additional safe storage space close to the market Vs Passing on certain additional discounts to e-commerce/Quick commerce chains (and probably to end customers too)

Liquidating the excess stock can be strategically considered as an opportunity to improve the market visibility by running a promo like offering a low-selling product/SKU as a freebie with a high-selling one. Such a push marketing strategy may create a new customer base for low-selling SKUs. Also, running a BOGO (Buy one Get one) offer can significantly make customers "Feel good" while reducing reverse logistics costs & probable recycling costs for goods close to expiry.

Sometimes suppliers can help you deal with excessive inventory. In one of my roles, we could produce the MOQ needed, but the supplier kept the "unwanted" inventory in his warehouse, until I needed it. It was huge for my company, because they didn't know they can do that and had excessive inventory.

Suppliers can indirectly play a key role & help optimise the freshness levels of the inventory. If it is logistically manageable & affordable - one can consider negotiating with specific suppliers for a smaller batch size & more frequent buying of "fresh stocks" (so we still buy the same volumes as budgeted). While running a small batch can have a cost impact, one needs to assess this additional cost Vs the cost of holding additional inventory to arrive at a suitable decision.

Systems can help the planning community to order more accurately and arrive at the "Real Production Requirement" if distribution centres in certain regions are aggregated in terms of Demand & availability of stock at SKU level. It can turn out quite beneficial if DCs systematically "Talk" to each other & can reorganise the stock in the network to meet the demand. One needs to consider any regulatory restrictions while designing such a model & also needs to be careful about the cost of logistics which should not kill the significant profit margin (unless we are heading to the inventory destruction risk at the source location)

Inventory Management Training: Offer detailed sessions on inventory management principles, including tracking inventory levels, demand forecasting, and reorder point management. ERP Training: Educate staff on using ERP for real-time inventory tracking, generating forecasts, and setting dynamic reorder points. Provide hands-on practice to ensure proficiency. SCM Simulations: Utilize supply chain management (SCM) simulations to give staff practical experience in handling inventory scenarios. These simulations help in understanding the impact of decisions on inventory and costs. Third-Party Training: Partner with third-party training companies that specialize in inventory management and ERP. Their expertise.