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Avoiding Inventory Overload

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electronics862
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Stock Keeper
Re: Timing to sell-off is important
electronics862   10/31/2011 10:26:12 PM
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Thanks for the post ken. The Inventory overload can be avoid by having a perfect knowledge of market standards, and to have price variations to attract new buyers. It can be overcome by good project handling and to mee the market requirements in quality.

Eldredge
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Supply Network Guru
Re: Timing to sell-off is important
Eldredge   10/31/2011 12:14:58 PM
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@Ariella  - You're right...and min buys probably are not usually the major cause for inventory problems. But, as you point out, it ids a factor that should be managed.

Jack Schumann
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Blogger
Avoiding Inventory Overload
Jack Schumann   10/28/2011 3:54:37 PM
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Hi Ken, 

A very insightful article.


As the Director of Excess Management Services at Virtual Chip Exchange, I see inventory problems daily. As some of the comments point out, there is not just one way that inventory becomes excess. The bottom line is you have it, and don’t want it any longer. This is where a trusted business partner that specializes in solving the problem can provide immense help.  

Your article specifically mentions “coding duplication” - where customers purchase parts under two different client part numbers. We see this on a daily basis and have developed our Omniseach program for situations like this. While is seems to be most successful in large, multi-plant operations, any organization with more then one manufacturing facility can benefit from it. Once the excess is listed with us, all participating divisions within a company can see and access excess inventory from across the board. This quickly helps to reduce duplication and additional, unnecessary costs.


The “timing” that you mention is accurate, but with an emphasis on the fourth quarter/end of year. Now is when many companies approach us to help move their excess inventory, generally with a sense of urgency as they absolutely do not want it on their shelves or books at the end of the fiscal year. Excess inventory management should be an ongoing process throughout the year—when you realize that you have excess inventory, deal with it promptly. Waiting too long not only puts your product at a great risk of becoming obsolete and/or replaced by a newer, faster, lower power part, but it also has a greater chance of losing value to potential buyers.

 We work with our customers throughout the year, reminding them to be pro-active in dealing with their “problem”. As such, we occasionally send reminders like this one, broadcast to our members last week:

 Trust is the basis of every good business relationship.

Whether reported in TIME Magazine, Business Week, Forbes, or in the semiconductor industry press, the core values of VCE Virtual Chip have remained unchanged since the 1990s; to be Honest, Fast & Fair.

Especially now, when many companies want to turn their excess inventory into cash, a trusted partner makes all the difference. We provide honest market feedback, resulting in a fair price for your excess stock.


If you are facing year-end with excess inventory you need to eliminate and do not have a trusted supplier to go to, feel free to contact me for an honest evaluation of your situation.

Ariella
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Supply Network Guru
Re: Timing to sell-off is important
Ariella   10/28/2011 12:01:36 PM
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Good point, Eldredge. I imagine that it the minimum buy requirements could be subject to negotiation, though. If a business finds it tends to be stuck with excess as a result of purchasing a minimum that exceeds its needs.

Eldredge
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Supply Network Guru
Re: Timing to sell-off is important
Eldredge   10/28/2011 7:40:23 AM
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Minimum buy requirements  and obsoleted components also are factors than can contribute to excess inventory.

prabhakar_deosthali
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Supply Network Guru
Timing to sell-off is important
prabhakar_deosthali   10/28/2011 7:24:30 AM
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The problem of excess inventory is faced by almost every company some time or the other -whether it is due to the overcommitment by the sales dept for a products sale, a project abandoned just before the product introduction into the market, cometitor's product available at a cheaper price or some such reason.

The important thing is how quickly a company arrives at this conclusion that there is an excee inventory which needs to be disposed off  and  how quickly the company is able to dispose it off even at a lower than the current market price and save on the indirect overhead of maintaining that inventory.

garyk
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Inventory Controller
Inventory Overload
garyk   10/27/2011 7:59:23 PM
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Inventory overload has to be contolled by the CM'S. It's a flow up problem. The manufacture buys the materials, manufacturing equipement ( a large investment) and support persoanal to support the Distributor demans and in some cases the CM'S. When the CM pull in or push out orders or cancell the orders, this is what causes the overload. Every one is trying to support the CM'S requirements. The CM really doesn't care what it takes to receive product on time, they just want the product.  Lets not forget, cost down evey 6 months or so.

I don't think this well be a big problem in the future for Distributors, China CM'S have started to use only manufactures and China distribution hubs to delivery product to the various CM's in there areas. 

ThinkNThanks
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Stock Keeper
Re: Overload
ThinkNThanks   10/27/2011 7:53:07 PM
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Always have a backup plan on excessive inventory; your competitors can help to dilute your inventory at lower cost than their suppliers. Your competitors can be your good friends too J

Hospice_Houngbo
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Supply Network Guru
Re: How to deal with excess inventory
Hospice_Houngbo   10/27/2011 2:21:54 PM
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@ken:

"I will be giving examples of actions you can take with excess inventory in the Nov 2nd webinar. "

I will be looking forward to that.

My guess will be if this happens you just accept your lost and move forward and try to plan well next time. But sometime an " excess inventory " can put you out of business. Right?

Ken Bradley
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Blogger
Re: How to deal with excess inventory
Ken Bradley   10/27/2011 12:53:53 PM
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TaimoorZ, I will be giving examples of actions you can take with excess inventory in the Nov 2nd webinar. 

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