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Why your excess inventory is a problem

Striking a balance in your warehouse is a daily challenge. Your fill rate shows you exactly how well you’re keeping up with orders and managing your inventory replenishment, but keeping that number high is easier said than done. 

Sometimes, you’ll find yourself without the stock on hand to fill your orders, and that causes major headaches in the warehouse and with your sales team.

There are only so many times you run into stock-outs before you realize that keeping extra inventory around helps you manage those days when an unexpected order comes into the warehouse. But what happens when that process of adding a little extra stock leads to excess inventory throughout your warehouse? The answer is simple, and it is costly. You just keep piling up the extra inventory, because holding some excess is better than being caught without stock when you need it most, right? This is not the optimal way to conduct your inventory management!

Here’s a way to look at this issue:

Do you have a feel for how much unnecessary stock you actually have lying around? How much, in terms of dollars, do you have locked up in your warehouse that doesn’t need to be there? If you manage more than one warehouse, that number could be significantly larger than you think.

Holding on to all this excess stock is not the answer here. There are other ways of managing your supply chain and your warehouse to keep excess to a minimum while keeping fill rates in the 90s. Imagine how much money you could save every month with a policy and a process that helps you achieve your best fill rate without the need for unnecessarily high stock levels.

The team at Netstock has been dealing with businesses’ excess inventory issues and other inventory management problems for years. We’ve learned some fundamental truths about how and why the problem of excess remains so pervasive among distribution, manufacturing, and retail businesses.

Learn more about the 5 hidden causes of excess inventory. 

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