{"id":19454,"date":"2024-05-15T09:00:00","date_gmt":"2024-05-15T01:00:00","guid":{"rendered":"https:\/\/blog.ninjavan.co\/en-ph\/?p=19454"},"modified":"2024-04-30T15:54:09","modified_gmt":"2024-04-30T07:54:09","slug":"slow-moving-inventory","status":"publish","type":"post","link":"https:\/\/blog.ninjavan.co\/en-ph\/slow-moving-inventory\/","title":{"rendered":"How to Deal with Slow Moving Inventory"},"content":{"rendered":"\n

As a small business owner, you know that selling out your products, restocking supplies and then selling them out again is key to generating revenue. What if it takes months and months before your shelves are completely empty<\/a>? <\/p>\n\n\n\n

What is <\/strong>slow moving inventory<\/strong>?<\/strong><\/h2>\n\n\n\n

In the fast-paced world of online selling, \u201cslow moving inventory<\/strong>\u201d is a slow \u201ckiller\u201d in business. It\u2019s a common and often recurring challenge for small and medium-sized enterprises (SMEs).<\/p>\n\n\n\n

Slow moving inventory refers to products that stay on shelves longer than expected<\/strong>, taking up space while not generating ROI. These items aren\u2019t as popular or in-demand with customers, or they get replaced by newer items, so they sell slower<\/strong> and are outdated sooner. In general, these slow-moving items stay on the shelves for more than six months. If you sell perishable items, you can\u2019t afford to have your inventory sit for over 90  days.<\/p>\n\n\n\n

How to identify slow moving inventory<\/strong>: 4 ways to solve low-selling SKUs<\/strong><\/h2>\n\n\n\n

Both fast moving and slow moving inventory pose a problem to businesses. Fast-moving goods cause mistakes in a poorly managed warehouse or create order delays to replenish in-demand stock. But slow-moving goods yield waste, which could cost your business more money. <\/p>\n\n\n\n

It\u2019s important to keep track of your entire inventory (including transport inventory), making sure you don\u2019t have stock keeping units or\u00a0 SKUs lagging in sales<\/a>.<\/p>\n\n\n\n

1. Check for overstocked items<\/strong><\/h3>\n\n\n\n

Seeing piles of old stock in boxes and bags sitting in your warehouse?\u00a0An obvious indicator of slow moving inventory is the accumulation of excess stock<\/strong> beyond projected sales forecasts.\u00a0<\/p>\n\n\n\n

Pay attention to products that linger on shelves. These overstocks tie up valuable capital and occupy precious storage space, potentially leading to increased handling costs and reduced profitability.<\/p>\n\n\n\n

2. Calculate the stock turnover ratio<\/strong><\/h3>\n\n\n\n

Check your business\u2019s stock turnover ratio. This ratio is obtained by dividing the cost of goods sold by the average inventory value. <\/p>\n\n\n\n

A lower ratio indicates slower-moving items, suggesting that inventory is sitting longer on shelves<\/strong>. In contrast, a higher turnover rate signifies brisk sales and efficient inventory management.\u00a0By closely monitoring this metric, you identify which products require attention to avoid stagnation.<\/p>\n\n\n\n

3. Average the time it takes to sell out inventory<\/strong><\/h3>\n\n\n\n

Tracking the time it takes for products to move from acquisition to sale lets you predict how long or how fast\u00a0 it takes for a specific SKU to go out of stock. This insight, which can also be a way to validate other inventory checks, enables proactive measures to address slow moving inventory before it becomes a profitability concern.<\/strong><\/p>\n\n\n\n

4. Forecast supply and demand<\/strong><\/h3>\n\n\n\n

Given sufficient data, you can predict demand and adjust inventory levels accordingly. <\/p>\n\n\n\n

Leverage historical sales data, market trends and other relevant factors, so your business can anticipate buyers\u2019 changing preferences<\/strong>, satisfy their hunger or demand for more of the same products or services, and reduce the risk of overstocking slow movers.<\/p>\n\n\n

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\"Ninja<\/a><\/figure>\n<\/div>\n\n\n

How <\/strong>slow moving inventory<\/strong> affects your business<\/strong><\/h2>\n\n\n\n

Unsold products can have significant implications for your business’s financial health and operational efficiency. <\/p>\n\n\n\n

Here are some ways it can impact your business:<\/p>\n\n\n\n