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Tag: Managing Inventory

  • When Is the Right Time to Think About Your Holiday Inventory? | Entrepreneur

    When Is the Right Time to Think About Your Holiday Inventory? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    It’s currently summer, so most people are thinking about attending barbecues and buying fireworks — not planning their holiday shopping season. However, if you run a brick-and-mortar store or ecommerce business, this is the best time to begin thinking about the holiday inventory.

    Successful planning in June and July will set you up for profitability in November, December and January. Here are six ways you can successfully plan for increased inventory demand during the holiday season.

    Related: July Is Just Early Enough to Start Planning for Holiday Selling

    1. Come up with a timeline

    The holiday season is the most profitable sales period for most retailers. According to the National Retail Federation (NRF), holiday sales exceeded $964 billion in 2023, a 3.8% increase from the previous year.

    So start by coming up with a timeline of key dates when you can anticipate increased sales and demand. These dates most likely include:

    Think about the shipping cut-off dates for each of these holidays, and add them to your calendar. That way, you can let customers know the last days to receive standard and expedited shipping on their orders.

    2. Determine what you’ll need

    Next, you’ll forecast the types and amount of inventory you’ll need for the holiday season. Having enough inventory on hand to meet customer demand will ensure you don’t lose out on business to competitors. It will also help you avoid overstocking items you don’t need.

    The best way to estimate holiday demand is by looking at previous sales data and taking note of customers’ shopping patterns. Of course, shopping habits can change slightly from year to year, so you also want to look at industry trends. For example, you can see what your competitors are doing and how they’re preparing for the holidays. And if you have an NRF membership, you’ll receive insights into consumer and retail trends.

    Once you’ve done adequate research, you can begin planning your holiday inventory. You can also start to think about when you should begin marketing and how much staff you’ll need to have on hand to manage the increased demand.

    3. Do an inventory audit

    An inventory audit involves regularly reviewing your inventory for accuracy. During an inventory audit, you’ll verify that your physical inventory matches what you’ve recorded in your financial records. An inventory audit can also help you spot inefficiencies in your supply chain.

    To perform an inventory audit, you’ll start by organizing your inventory to reduce the odds of miscounting items. From there, you’ll begin physically counting and recording each item into your inventory management software.

    Once the audit is complete, you’ll reconcile the count with your inventory records. If there are any discrepancies, you can investigate where they came from. You can also begin developing a plan to reduce discrepancies in the future.

    Related: You Should Be Planning Now for Holiday Sales — Here’s How

    4. Check in with your suppliers

    Once you know how much inventory you’ll need to meet the holiday demand, you should begin reaching out to your suppliers. Checking in early with your suppliers will ensure you’re on the same page and you’re not caught off-guard by changes to their order times or pricing.

    It’s also a good idea to ask if any of your suppliers offer pre-sale discounts or promotional pricing. It never hurts to ask, and some may be willing to give you a discount for large orders.

    5. Think about financing

    As you begin planning for your holiday inventory, one of the biggest issues is how you’re going to pay for everything. Many small businesses don’t have the cash flow to pay for a large inventory order, shipping supplies and the unexpected costs that come along with it.

    If you find yourself in this place, financing may be a good solution. Inventory financing is a one-time loan or ongoing line of credit you can use to purchase inventory for your business. The inventory purchased is used as collateral for the loan.

    Financing can help you maintain consistent cash flow during seasonal fluctuations in your business. It will also give you the flexibility to respond to increased customer demand. If you’re interested in exploring your financing options, you should begin looking into this now so you’ll be well prepared come fall.

    6. Place your orders early

    Many customers begin their holiday shopping in September and October out of concern over product shortages and slow shipping times. So you want to place your inventory orders as soon as possible so you can capture those early shoppers.

    However, it’s impossible to forecast exactly how much inventory you’ll need, and you’re bound to run out of items. So you also want to have a plan for how you can quickly replenish out-of-stock items. For example, a good inventory management system will alert you when you’re running low on certain items and need to re-order.

    Related: Keep Calm and Holiday On: How to Plan for the Holidays Year-Round

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    Joseph Camberato

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  • How AI Can Revolutionize Our Broken Supply Chain | Entrepreneur

    How AI Can Revolutionize Our Broken Supply Chain | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The Covid-19 pandemic sent shockwaves through the global supply chain, exposing vulnerabilities and inefficiencies that were previously hidden. From inventory mismanagement to port backlogs, the pandemic magnified a myriad of issues that challenged even the most robust supply chains. As businesses search for innovative solutions to address these problems, Artificial Intelligence (AI) stands out as a powerful ally. We explore how AI-driven predictive analytics can support and enhance experienced human decision-making in the face of evolving global supply chain dynamics.

    The power of AI in tackling supply chain challenges

    The pandemic brought to light several key challenges that businesses must address to ensure smooth operations in their supply chains. By leveraging AI, organizations can gain insights into crucial aspects such as inventory management, container allocation, demand fluctuations, freight pricing and port operations. Let’s examine how AI can help tackle some of these challenges.

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    John Monarch

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  • 5 Ways Retailers Can Unload Excess Inventory | Entrepreneur

    5 Ways Retailers Can Unload Excess Inventory | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The struggle is all too real when it comes to excess inventory in retail. Market volatility and unpredictable events make it difficult for merchants to accurately forecast demand, resulting in excess stock.

    That, coupled with inflation and the fact that consumers are being more mindful of discretionary spending, means retailers today are holding on to more inventory than they’re comfortable with.

    Retail Customer Experience reports that half of U.S. retailers are dealing with excess stock and 27% wrote off surplus inventory as a loss in 2022. And if that weren’t concerning enough, 53% indicated their business will face “dangerous ramifications” if the excess stock remains unsold.

    In light of these challenges, it’s crucial to implement strategies that address excess inventory head-on. That way, you can minimize financial losses, create space for new merchandise and improve overall business performance.

    Let’s look at five ways to do just that.

    1. Be proactive with stock transfers

    If running multiple stores, regularly review stock levels across different locations. Optimize inventory distribution by strategically unloading (i.e., transferring) surplus stock from locations with high inventory counts to those with greater sales potential.

    For instance, if a certain SKU is underperforming in one store, but is doing well in another, consider initiating a stock transfer sooner rather than later. Don’t wait until the end of the season to take action. Pay attention to your daily and weekly sales data, then take preemptive measures accordingly.

    Quick, decisive action is possible if you have a centralized retail inventory management platform for all your locations. By ensuring all your stores are managed from a single system, you gain better visibility into your inventory levels and streamline operations.

    Related: Free Up Your Finances By Avoiding the Pitfalls of Excess Inventory

    2. Leverage your online store and marketplaces

    Expand your reach beyond brick-and-mortar by setting up shop online. This doesn’t just mean selling on your website; in many cases, retailers will benefit from selling on social media and online marketplaces.

    These platforms provide access to a vast online audience actively seeking products, so by listing your excess inventory on these sites, you’ll be able to get more eyeballs on them—and potentially more sales.

    3. Re-merchandise products

    In some cases, it isn’t the product that’s stale; rather, it’s the merchandising strategy behind it.

    Unloading excess stock doesn’t necessarily mean donating products or selling them for a massive discount. If you’re sitting on surplus products, you may be able to sell them faster by changing how they’re displayed.

    Perhaps you can showcase unique ways to use an item. Maybe you can implement a bit of storytelling in your windows or shelves. Think outside the box and get creative with your displays to make surplus products more enticing to customers.

    Related: The Best Way to Move Your Excess Inventory

    4. Implement promotions

    Sales and promos are classic tactics for getting rid of surplus stock, and for good reason: they work. Research from Google reveals 87% of shoppers say that getting a good deal is an important consideration when deciding which retailer to buy from.

    As for which type of offer to implement, consider the following.

    Discounts: Incentivize customers to purchase surplus stock by offering discounts. This can include seasonal sales and clearance events. In some cases, you could instill a sense of urgency by running flash sales or limited-time promotions to encourage customers to take action ASAP.

    Buy One Get One (BOGO): Get rid of surplus stock faster by selling them two (or more) at a time. BOGO promos lend themselves well to categories like apparel and accessories; shoppers appreciate the opportunity to mix and match. BOGO also works well for beauty products, as customers enjoy the chance to stock up on cosmetics and skincare items.

    Gift with purchase: If you’re having difficulties unloading excess inventory, offer them as freebies. This tactic clears out excess stock and can improve basket size and order values, especially when you offer gifts with qualifying purchases.

    5. Negotiate return to vendor agreements

    Consider using return-to-vendor (RTV) agreements to address excess inventory. RTV contracts allow retailers to return unsold merchandise to the original suppliers.

    Depending on your relationship with vendors, it may be feasible to negotiate the ability to return unsold products. Remember that an RTV agreement could mean paying more per unit.

    RTV agreements can also add complexity to your operations, especially if you’re running multiple stores. Coordinating the logistics of packing, shipping and tracking unsold goods can be difficult and lead to operational costs.

    Final words

    Getting rid of excess stock requires a strong inventory management system and a proactive approach to inventory management. You can reduce the negative impact of surplus stock by keeping a close eye on your inventory reports and taking proactive steps to correct course.

    From there, ensure you cover all your sales channels to get merchandise in front of as many shoppers as possible. And if you want to boost conversions, add some promotions to the mix. Finally, consider negotiating RTV agreements with your vendors to minimize the risk of surplus stock.

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    Ana Wight

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  • Free Up Your Finances By Avoiding the Pitfalls of Excess Inventory | Entrepreneur

    Free Up Your Finances By Avoiding the Pitfalls of Excess Inventory | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Most companies have a lot on their plates currently. The rapid shifting of societal and economic elements has brought challenges to getting funds, sustaining cash flow, finding partners and dealing with essentially every other aspect of running a startup.

    Supply chains usually don’t make it into the startup headlines. But in today’s climate, the chaos of global supply and demand means that supply chain management is one of the most crucial skills early-stage teams need to get right.

    Even the largest retail companies — such as Target — have recently gone public about their supply chain issues and the impact of excess inventory. They are announcing drastic strategies of cutting prices and canceling orders to regain their inventory equilibrium and free up warehouse revenue.

    And if giants like Target are having trouble demand forecasting, smaller businesses and startups are in even more precarious situations, often without cash buffers to support wasted materials and orders.

    Related: How Advanced Analytics Can Put an End to the $50 Billion Retail Overstock Problem

    How does excess inventory happen?

    When your inventory strategy hinges on fulfilling demand, rather than considering lead times for replenishment, you end up over-ordering. Bulk buying seems cheaper in the short term and less risky than letting orders go unfulfilled. Still, eventually, you’ll probably end up with a case of musical chairs: You can’t shift inventory quickly enough, it piles up and you need to store or shift it because no room remains for the new product you’re trying to impress the market with.

    This also happens because of a lack of accurate demand forecasting, but forecasting tools only work when they can find patterns. When you have an inventory management solution to make deliveries and consumption more predictable, you can order more frequently in smaller batches. This way, you’ll have less inventory tied up and sitting around, and you’ll have more ability to be nimble — to intervene and course-correct — without saturating your warehouses. The biggest gap in demand forecasting and planning systems is their inability to support real-time intervention.

    Why is excess inventory significantly impacting early-stage companies?

    A stunning number of startups find that the money tied up in excess inventory could equate to a round of funding. That’s funding that could support the startup’s research, survival, growth or next development phase. What might seem like a temporary glitch becomes a significant hindrance to a startup’s long-term success and life expectancy.

    Managing material goods should be vitally important to startup founders; without it, they just won’t be able to stay financially nimble enough to take chances and grow.

    Take Peloton, for example. This VC-backed company found itself with products with huge physical components (bikes and treadmills) that were no longer selling in droves. Peloton faced dire financial consequences because of this wasted inventory and had to take emergency measures, including laying off thousands of employees and canceling plans for a new manufacturing facility.

    Rivian, an electric vehicle manufacturer, is the latest casualty of excess inventory. An inability to sell its physical product meant it had to hike prices before it had even developed enough to sell at scale. The final nail in the coffin? The company made the critical mistake of asking customers who had already ordered the lower-priced vehicle to make up the difference.

    The sad thing is that this could have been a very different story; the company admits that if it hadn’t struggled so much with its supply chain issues, it could have produced two times more units.

    Related: 3 Ways Small Businesses Can Survive the Supply-Chain Crisis

    How should startups deal with the immediate problem of excess inventory?

    Before startup leaders can begin practicing better demand forecasting, they’ll need to deal with the immediate problem of excess inventory and insufficient cash.

    How startups resolve this initial state of affairs will depend on their unique financial situation. If they need the cash to stay alive, faster cash velocity is better than inventory as an asset on their balance sheet. For most inventory-heavy startups, there are more excess and wasteful dollars tied in inventory than the savings they are gaining from laying off employees right now.

    One immediate step that can lighten the load is to cancel all upcoming orders that are in excess of your needs. If you can access real lead time data, you can reroute or cancel inventory. You shouldn’t have to consider laying off employees when there’s excess inventory that could be monetized.

    How do you know when it’s time to make this kind of intervention? You might be seeing changes in demand, abnormally long lead times, changes in on-shelf availability, etc. Keep an eye on the materials passing through (and getting stuck) in your supply chain.

    Related: How Better Inventory Management Can Improve Your Finances

    How can startups use AI to forecast demand?

    Newer retailers and early-stage startups can use AI-powered tools to better plan demand going forward, and it needn’t mean retraining or relearning everything you know about supply chains. Consider these strategies:

    1. Keep an eye on lead time estimates

    Looking ahead at real lead time estimations for your goods can help you plan for potential excess inventory. Understand how often a supplier can deliver. Look at global shipments to determine if you will get your materials on time to either distribute or manufacture. This information can set up more accurate expectations for the rest of production and beyond. It also helps you advise customers ahead of time rather than apologizing after you’ve let them down.

    2. Don’t undersell your clearance inventory

    Price your clearances properly; there is no need to price something 50% off when a 40% discount would result in the same purchase volume. The great thing about awareness of lead times is that you don’t need to go to desperate measures. You can see ahead at the whole picture and put more gradual, smaller measures in place to deal with excess inventory.

    3. Actively manage inventory buffers

    Inventory buffers shouldn’t just stagnate because excess inventory (even in the form of a planned buffer) can oversaturate your supply chain, causing the flow of goods to grind to a halt. If you can actively manage inventory buffers for critical goods, factoring carrier and demand disruption patterns, you can create a healthier flow even when the market environment is in turmoil.

    Excess inventory happens to the best (and biggest) of us. But when you’re an early-stage company fighting to fuel your way ahead with VC funding and struggling to find enough spare cash to make changes, then excess inventory can drag your business down and threaten its future. By focusing on your supply chain and reading lead time estimates to manage the flow of your material goods, you can take back control and free up your finances.

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    Ali Hassan

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