Too Much Inventory In Your Manufacturing Warehouse?

Excess inventory in manufacturers warehouse can be a difficult problem. In recent reports, up to 15% of all goods are either returned, or never sold to begin with. As a result, a large amount of these goods end back with the manufacturer. This has flow on effects of increased warehousing costs, as at least 15% of space is required for these sorts of products. Overstocking is a problem in today’s competitive markets with pressure of tight margins and the need to optimise warehouse efficiency. Although many manufacturers choose to liquidate their excess stock using third-party auctions or discount sellers, this might not a long term and economically viable solution. There needs to be a better solution or your manufacturing business will continue to waste time and resources storing and offloading your surplus repeatedly throughout the year. Here are five steps to getting rid of excess inventory in your manufacturing warehouse.

Get rid of obsolete inventory

In order to optimise and streamline your warehouse, you need to start with a clean canvas. This means getting rid of your old and obsolete inventory. This is a necessary step, as you need space to plan accordingly. There are many ways to clear excess stock, such as reselling, auctioning or even donating to charities.

Start tracking your inventory in real-time

After your warehouse space is cleared, it is imperative to start collecting information on how you use the remaining space you have. This step sets the foundation of processes so that you can manage and decrease excess inventory problems in future. Using real-time data enables you to adjust your picking, packing, and shipping processes in a way that meets the expectations of your consumers and increases satisfaction.

Evaluate your warehouse

Now you have an understanding of what your real-time needs are, you can start planning for total optimisation and implementation. Perhaps reorganising your shelves, procedures, equipment and technologies. To complete your evaluation, you can either engage in your own research, or hire a consultant who is an expert in this area.

Reduce inventory errors

A major reason for excess inventory is through inaccurate counting and re-stocking processes, often due to human error. To help enhance processes and decrease errors, businesses can use technology to compliment workers. For example, using barcode verification can help improve order accuracy and coupled with real-time warehouse tracking ensures accountability for each workers at all times. This is especially beneficial when linked up to a centralised manufacturing inventory management system that can increase the accuracy of records.

Streamline manufacturing processes

Knowing your real-time manufacturing inventory movements and reducing the possibility of human error in your warehouse, you can now consider modifying your manufacturing inventory process. Advanced technologies have improved the accuracy of pull-based systems, such as make-to-order, and both small and large businesses are learning the advantages of these lean manufacturing methods to reduce the excess inventory. Many manufacturers adopt a full just-in-time system in which orders automatically trigger everything from raw materials ordering to job planning, other manufacturers may simply choose to reduce their inventory stock space by creating a hybrid of make-to-stock and make-to-order models, powered by real-time, reducing error insight into their current stock levels.

Take action now

Returned, excess, or overstock inventory is a common problem in manufacturing because most businesses think of short-term solutions, such as reselling old stock at discounted prices.