6 Errors that generate Excess Inventory

4 minutes to read

Excess inventory is a very common problem in many companies. However, this problem can hurt sales and compromise the smooth functioning of other areas.

Even with good internal communication, more inventory than needed turns out as a result of several errors in the company.

Don’t know what are the errors that contribute to excess inventory? We will talk. Check and write down the tips for not having long term losses.

What is excess inventory?

When we talk about excess inventory, we are pointing to those products that are stored, however, with no forecast of sale or dispatch. This can create several logistical and financial problems for the company.

Several factors can lead a stock to have more products than necessary. To avoid this type of problem, it is essential to be aware of the demands, sales and the correct storage of the boxes.

Excess inventory is capital that is at a standstill, which can generate losses and occupy a place that could be used by a product with greater demand. Communication between internal areas of the company can be a good way to avoid excess stock.

To help you discover the possible causes of excess inventory, we have separated 6 common mistakes that can be closely linked to the formation of this excess inventory. Check them out.

6 errors related to excess stock

1 – Failures in internal communication

When the purchasing, sales and inventory sectors are not well communicated, the stock may exceed. Knowing what the current demands are is essential for a purchase aligned with what is necessary.

Inventory management can purchase extra products when they are unaware of how the demands of buyers are going. Therefore, it is essential to keep all sectors in constant contact, especially those that have a direct influence on logistics.

2 – Storage problems

Some boxes have larger quantities of products. That is, a single box can contain 24 units of a given product. The entry into the stock needs to be surgical when recording the correct quantities in each product shipment.

If not, there may be unnecessary purchases of products that are still standing on the shelves.

3 – Inventory problems

The inventory is responsible for having stock information such as input, output, quantity and location of products. Disorganized or incomplete inventory can generate surplus inventory.

4 – Lack of attention to stock turnover

It is important to have control over the most requested products, those that have less inventory turnover and the entire monthly and annual variation in product demand. Buying products in surplus, as they are at low turnover, is like stocking your capital without the possibility of investments in other areas.

5 – Drop in demand for a product

It is possible to have a drop in demand for some product in stock. In such cases, it is best to bet on joint action with the marketing and sales sector to think of ways to reduce the surplus.

6 – Lack of investment in technologies

It is undeniable that the world is increasingly technological. Many of these innovations can be present in various industrial sectors, including logistics.

Currently software that can assist in all logistical and inventory management steps are available in the market. Analyzing the sales performance of a product and analyzing the need for replacement are some examples of how technology can contribute to reducing excess inventory.

Responsible management

You just checked 6 errors that can influence excess inventory. As challenging as it may be, keeping products stocked consistently can prevent a variety of losses for the company. Always invest in acquiring more knowledge about inventory management.

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