Effective Inventory Management: Liquidation

Managing unsold inventory can be a daunting task for businesses, especially when dealing with the various terms and definitions used by different organizations. Accurately defining these terms and understanding how to manage different categories of inventory is crucial for effective collaboration between demand planning, inventory managers, and sales leaders.

When it comes to inventory, there are three main types: slow-moving, obsolete goods, and short-dated inventory. Slow-moving inventory is when the current available volume exceeds sales projections, which makes it likely to remain partially unsold before its expiration date. This can happen due to a variety of reasons, such as a decrease in demand, a change in consumer preferences, or an overestimation of sales. When faced with slow-moving inventory, sales reps can offer discounts to primary retailers to boost sales and get the product moving. If the inventory has a shelf life remaining, they may allocate it to secondary sales, donate it to charity, or destroy it if it's at risk.

Obsolete goods that have undergone packaging or recipe changes, been discontinued, or gone out of season. Seasonal items are the most common obsolete products for many manufacturers. For example, limited edition products or holiday-themed cleaners, fragrances, or accessories. Similarly, when a company changes branding or packaging design, retailers are often restricted from selling the previous packaging, rendering it obsolete. In such cases, businesses need to come up with a plan to dispose of the obsolete inventory in a way that minimizes financial losses and maximizes resource utilization.

Short-dated inventory refers to unsold short-dated products, but it's important to note that we’re specifically talking about the manufacturer’s definitions here. Retailers and manufacturers have commitment dates long before the printed expiration date. Retailers need to be confident that goods coming into their stores have enough shelf life remaining to sell to end consumers. Therefore, manufacturers need to be transparent about the shelf life of their products and work with retailers to ensure that they are not left with short-dated inventory.

Distressed inventory is common in the CPG industry, where CPG manufacturers hold around 50% of all inventory. It’s particularly prevalent in fast-moving CPG industries due to perishability. Clothing might become less desirable as trends change, but it rarely has a firm sell-by date. Many clothing retailers have in-house solutions for distressed inventory, such as the clearance rack. In contrast, CPG manufacturers need to be proactive in managing distressed inventory to avoid financial losses and prevent waste. This can involve offering discounts to retailers, repackaging products, or exploring alternative channels for distribution.

When it comes to managing inventory, it's important to prioritize which items need to be sold urgently and which ones can wait. This is because holding onto inventory for too long can lead to financial losses, wasted resources, and negative environmental impacts.

The most urgent type of inventory is short-dated inventory. This refers to products that have a limited shelf life and an expiration date. If these products are not sold before the customer guarantee date, the number of available sales channels will shrink. If they're not sold before the expiration date, the chances are good that they'll end up sent to a composting facility, dumped in a landfill, or combusted for energy recovery. To avoid this, it's crucial to remain open to every available sales channel to ensure that the product gets into the hands of consumers.

The second most urgent type of inventory is obsolete goods. These are products that are no longer in demand and have lost value as time has passed. Obsolete goods are far less likely to sell through primary channels and lose value as they sit in distribution centers, in addition to the associated carrying costs. Therefore, in the interest of cost recovery, it's advisable to shift them to secondary channels sooner rather than later.

The least urgent type of inventory is slow-moving inventory. This refers to items that are not selling as quickly as they should. If inventory outpaces demand, you're probably going to end up with excess at the end of the day. From there, you'll need to source alternative sales channels to free up space in your distribution centers for more profitable inventory. If the product doesn't have an approaching best-by date, you may want to offer discounts to primary buyers or brainstorm other incentives to get inventory moving. As a company, it is important to steer clear of the wastage of perfectly good HBC (Health and Beauty Care) products. Wastage can put a strain on the supply chains and financials of the company, which can be a problem in the long run. To avoid such a scenario, opting for liquidation is an excellent solution.

Liquidation helps to reduce waste, which is beneficial for the environment. It is also cost-effective, which can have a significant impact on the company's financials. By moving excess inventory quickly, companies can recover more costs since the product will have a longer shelf life. Clearing out critical warehouse space to make room for new inventory is also an added benefit.?

One of the key benefits of working with a liquidation expert like Surpluss is that they have a buyer network tailored to the products a company offers. Not all buyers will be able to purchase all inventory types, so having another buyer to turn to ensures that the product doesn't go to waste. Surpluss has a vast network of buyers, which means that they can help to find the right buyer for a particular product.

Liquidation usually involves purchasing inventory from manufacturers and then reselling it to another buyer. This can be done in two different ways. The first method is the reseller may purchase the inventory and take it into their possession before reselling it. The second method involves finding buyers for the inventory first before purchasing it from the manufacturer.

However, working with Surpluss means that they take care of the inventory and take it into their possession. They then work on finding the right buyer and handle the logistics and shipping of the product. This is an added benefit for the manufacturer as they do not have to worry about the logistics and shipping of the product.

It is important to work with liquidation experts like Surpluss who can step in to work with manufacturers and sellers to move problematic inventory into their buyer network. This ensures that the inventory is sold instead of being wasted, benefiting both the environment and the company's financials. By opting for liquidation, companies can avoid any financial strain and ensure that their products do not end up in landfills.