Slow-moving inventory refers to the goods or inventories that stay in the warehouse or storage space for a predetermined time. The classification of slow-moving, however, depends on the sector of the economy or the nature of the products. For example, stocks not transported within 90 days are typically regarded as slow-moving in certain sectors.
Slow-moving goods take up space, making them difficult to manage. Cash flow can be slowed down by tying up capital for slow-moving merchandise, which can impact your company. Several things might result in slow-moving inventory, including a slowing market, incorrect sales projections, ordering more volume to save on cost per unit, or strong promotion by rival businesses.
How To Identify Slow-Moving Inventory?
The greatest technique to detect slow-moving inventory is to better categorise goods related to cash management. However, there are other ways as well. The inventory can be categorised by using a variety of analysis techniques. Industries can also rank the commodities according to their month-on-hand to determine which ones are slow-moving. Calculating the total number of months-on-hand involves dividing current inventory quantity by average monthly utilisation. Generally speaking, slow-moving commodities have more months on hand.
How Can You Manage Slow-Moving Inventory?
Inventory that moves slowly can become a liability very fast. Business money is locked up in sluggish inventory and seizes resources that may be used for company expansion. Consequently, controlling slow-moving inventories is crucial. The following are the several methods for managing slow-moving inventory:
1. Determine the slow-moving Items and prepare a slow-moving inventory report.
Different industries use different techniques to calculate the slow-moving inventory. However, the three most accurate methods that are frequently used by industries are:
The most common method is to compute the number of overstocked items. A product is considered slow-moving if it has been in the warehouse for more than 12 months and there has been no demand for it for more than six months.
Calculate other stocks and then determine whether or not its inventory is slow-moving. This method’s accuracy rate is usually high.
The approach to determining the frequency of shipments is the most accurate. A specific product is regarded as a slow-moving inventory when it hasn’t been shipped for 120 to 150 days. While working in a vast warehouse, people are counting items on a moving cart between shelves with stacked boxes.
2. Try to make your slow-moving inventory work!!
If you discover that you have slow-moving inventory, you can take the following actions rather than lowering the price and selling it:
Make sure the products are visible on your website. There are still a lot of folks looking for sluggish inventory.
Then, if it is visible, look at the image quality. Does the image display excellent quality? Then, try to upload a high-resolution image with a precise product description. This method will aid in driving the most traffic possible to your website in order to promote your sluggish inventory.
3. Put your slow-moving inventory on sale.
The best course of action is to sell those things if you cannot control your slow-moving inventory by using the two methods mentioned above.
Indian consumers are constantly looking for a deal! You can make a SALE announcement for your slow-moving inventory to spur customer demand and enable them to buy things at a lower price. Of course, you must somewhat lower your cost price, but this won’t result in a significant loss for your company.
A great strategy for moving slow-moving inventory is promoting the products included in the Deal of the Day. Following this news, consumers will act right away to purchase the products.
4. Consider liquidators for your slow-moving inventory
When none of the aforementioned strategies work and you know you will lose money on your slow-moving inventory, you need to consider using liquidators for your goods. With the aid of the liquidators, you can sell off your inventory for a set price.
How Does Slow-Moving Inventory Turn Into An Asset?
Businesses try to optimise inventory management through efficient and economical business practices. However, time is what determines whether a firm will succeed or fail. For the majority of retailers, slow-moving inventory is a common problem. However, it would be best if you didn’t believe that slow-moving inventory would ruin your company because you can still make money from it. The following causes are listed:
1. Review your marketing tactics.
First, you should assess the marketing plans you’ve put in place for your company. Try to determine which approaches are successful and which fail. Next, verify whether the people you are targeting are potential customers. Ensure all your product photographs are updated and appealing to potential customers. Then, you can resume selling your products through social media, email marketing, or the Google Display Network. Target the consumers who looked at your unsold product earlier with creative material.
2. Use a range of sales strategies
If you have a lot of slow-moving products, you should opt for deeply reduced promo
tions. Through various sales techniques, announce a 50%–60% discount on selected products.
Inform your customers about any flash sales you are doing for a short time. To convey urgency, you can set up a banner on your website.
Clearance Sales – Customers may receive clearance sales twice a year. Old, unsold stocks are liquidated during this auction, which lasts 3-6 months. Social media can be used to let people know about this.
Seasonal Sales – Make an effort to offload your stockpiles over the holidays. The best time to announce sales for the slow-moving inventory is during the holidays. However, you can announce seasonal sales on Christmas Eve in the days leading up to winter and summer.
3. Alter the way your sluggish inventory is shown.
You can alter your store’s display to increase sales of your slow-moving merchandise. For example, you can arrange the things in areas where they are visible, such as on the front shelves, close to the register, or where passersby can see them.
4. Combine the items that take time.
Combining two or three sluggish moving items will draw customers to purchase the merchandise. This method is also helpful in selling your slow-moving products.
Conclusion
These kinds of issues can occasionally arise in any firm. Therefore, business owners must learn from each incident and implement a preventative strategy. For example, stocking inventory should be avoided as it could lead to issues in the future. Various slow-moving inventory procedures, including purchasing, processing, storing, and selling, may be conveniently controlled using multiple apps.
You can use a 3PL dashboard, like the NimbusPost dashboard, to manage your inventory.
NimbusPost gives you complete access to your operations by giving you information, data, and analytics. With such information, you can manage SKUs, stocks, and inventory obsolescence, slow-moving inventory in an effective manner.
