Well-organized inventory management is a must-have for a successful retail strategy. In the post-pandemic world, optimal use of warehouse space is a necessity to meet the budget bottom line and grow profits. Often, shippers are faced with inaccurate or inconsistent inventory management which leads to overstocking or understocking.
While understocking is a common issue, overstocking, or deadstock, is rarely talked about in the retail industry. However, it isn’t less important and can have equally damaging consequences to not having products in stock. Considered an ongoing struggle for sustainable manufacturing and supply chain management, overstocking and keeping deadstock is definitely not a bonus to any company. If your company faces challenges with understocking or dead inventory management, it is time to learn what deadstock is and the impact it can have on your business. Another crucial tip is to review your inventory management strategy to make sure you are prepared.
What does deadstock mean?
Deadstock is extra e-commerce inventory, which means that products or goods that are no longer sellable for a variety of reasons are stored and accumulated in a warehouse facility. These products are called ‘dead’ because they weren’t sold and are no longer expected to be released for a retail price.
The more deadstock you have, the more money that is wasted. Apart from that, extra inventory is also expensive to store because you have to pay for warehouse storage and overdue fines.
What causes deadstock?
It is difficult to accurately forecast market demand. Essentially, there will be some under and overstocking at some point. However, deadstock isn’t created in one or two occurrences. Accumulation of dead inventory is a result of systematic stock mismanagement. Therefore, carefully analyzing your current inventory management practices might give more insight into the key reason you keep accumulating deadstock.
How to get rid of deadstock – dead inventory management practices
If you already have plenty of products collecting dust on your warehouse shelves, there are a few ways you can get rid of them: a good old sale, charity donation, or giving them away as a gift to your customers.
However, the best way to avoid a problem is to prevent it from happening. So, the main step to prevent dead inventory from staying in your warehouse is reevaluating your inventory management strategy. This includes the following considerations:
- Accurate demand forecasts
- Upgrading your inventory management software
- Keep track of sales data and customer demands
- Set preorders and keep safety stock
Ultimately, updating your inventory management takes time and effort that will pay off. Keeping your stock under control will benefit not only your profits and productivity but will also present your company as a sustainable market player.