Spring is here! At your house, this probably means spring cleaning time – breaking out the cleaning supplies and getting to work prepping for the new season. Unfortunately, this may not be the case at your warehouse. At this moment there are countless piles of merchandise collecting dust in warehouses across the globe. It is dead stock; most has been forgotten, and none of it will ever be purchased.
However, even if you were planning to do an annual inventory spring cleaning, it’s not enough. Carrying dead stock, even for a little while, is a massive mistake that is costing you money.
Dead stock costs you in a variety of ways:
- Manufacturing costs – if you fabricate or in some way make the products you sell, there are associated costs you can’t recoup. The materials, supplies, shipping, and labor, to produce these dead stock products has already been spent.
- Purchasing costs – if your e-commerce business purchases inventory to resell that then becomes dead stock, you lose money on your investment. In most cases, you can’t simply return these products to your supplier or recoup your acquisition costs.
- Shipping costs – if you pay to ship merchandise to a 3PL or fulfillment center, you won’t see a return on this investment if said merchandise becomes dead stock. Furthermore, depending upon your 3PL partners, you may have to pay again to have this unsellable merchandise removed or shipped back to you.
- Carrying costs – unlike the aforementioned dead stock costs, this is an area where you can cut your losses. Paying month after month to store inventory that won’t sell is something you can put an end to. As long as you know where this inventory is and how to remove it, you can prevent these unsellable products from becoming a perpetual drain on your resources.
Having a plan to proactively recognize and eliminate dead stock is an oft-overlooked way to both cut your costs and boost your bottom line. As an e-commerce seller, there are many factors that affect your cost of goods sold (COGS) calculations. By reducing these costs, you increase your profit margins as well as your pricing flexibility – potentially making you even more competitive on the marketplaces where you sell.
Given the stakes, eliminating the waste of space, time, and money caused by dead stock cannot be a once-in-a-while task; it must be an integral part of your overall warehouse management system (WMS) plan.
You can’t fix a dead stock problem you don’t see
One of the main reasons that e-commerce businesses wind up carrying dead stock quarter after quarter is that they don’t realize the problem exists. Without a proper WMS like Skustack, it can be easy to lose track of unsellable products in your (or someone else’s) warehouse.
This specific issue was one that we sought to cure when developing Skustack, our patented WMS platform. Among its cadre of features, Skustack includes a precise and accurate inventory tracking system that helps you know where all of your inventory is at all times across all of your warehousing locations. Skustack even allows you to pinpoint the location of a particular piece of merchandise down to the bin level.
This degree of precision makes it possible to maintain accurate inventory records across your entire company. For added peace of mind, Skustack’s cycle counting feature allows you to conduct automated audits for all of your stock, no matter which bins or warehouses pieces may be hiding in.
Together, these features can make it easy to suss out where your dead stock is lurking and decide how to deal with it.
Know your fulfillment partners’ and Third-Party Logistics (3PL) companies’ dead stock removal policies
Many e-commerce sellers rely upon outside help for their inventory storage and warehousing needs. Whether it’s the Fulfillment by Amazon (FBA) program or an arrangement with a 3PL provider, these partnerships can ease much of the burden that comes with storing, picking, and shipping orders to customers. That said, when you can’t physically lay hands on your products, it can be challenging to identify and eliminate dead stockpiles. Skustack will undoubtedly help you to locate dead stock, but then what?
Thankfully most outside logistical services offer ways of handling dead, damaged, returned, or otherwise unwanted merchandise. If you know what the dead stock is, where it is, how much you need removed, and how you want it handled (destruction or return shipping are the most common options), your fulfillment/3PL partner should have a plan to help you do so.
The thing is, it’s not going to come cheap. Most providers charge fees for locating and removing your dead stock for you. This becomes yet another dead stock cost that you won’t recoup. The best plan is to try to avoid the problem in the first place.
Make identifying and removing dead stock a year-round priority
Regular inventory audits need to be part of any warehouse management plan. Yet, ask any warehouse employee how they feel about hand counting stock. Not only are they tedious, time consuming, and costly, but they are seldom wholly accurate. If that’s your only option, it becomes easy to justify conducting these periodic checks only a handful of times per year. Unfortunately, this means that it may be months before dead stock in your warehouse gets the attention it needs to stop costing you money.
On the other hand, cycle counting with Skustack is a streamlined, perpetual alternative that helps you keep much more accurate inventory counts – all without wasted time or labor disrupting your day-to-day business. You know what you have on hand and where it all is. In this way, Skustack makes it easy to find and flag dead stock before it becomes even more costly than it has to be.
Of course, not having dead stock in the first place is the real goal. Skustack makes it easy for you to keep tabs on what is selling and what refuses to move. With our patented WMS tool, you can carry out a two-pronged approach to combat the dead stock problems: clearing your unsellable inventory and minimizing how much of your inventory actually becomes dead stock in the first place. Contact us directly to see how we can not only help you keep tabs on the locations of all of your inventory, but also how we can help you keep all of your inventory moving.
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