The Reopening Stock Balancing Act

Managing Empty Shelves AND Excess Inventory as Locations Reopen

Provinces and states have begun to open up piecemeal across Canada and the US. Because of this, many businesses are faced with the unique problem of empty shelves AND excess stock. In areas that are open for business, Slimstock customers have told us they’re back at regular demand or higher, and some have had their busiest months ever as customers stock up on items that were previously unavailable. Conversely, the criteria for essential businesses can differ by region, so the same company that is facing stockouts at one location can have a closed store with a full stockroom a few cities away.  

Companies are also faced with the problem of a limited shelf in addition to inventory imbalance. Food and beverage producers and distributors are checking shipping lead times and expiration dates as chocolates and craft beer sit in warehouses, getting closer to their expiration dates. 

This article discusses a few best practices for inventory balancing and limited shelf life. Working through both of these challenges requires understanding your inventory and your markets. While it is possible to use spreadsheets and your ERP to manage these problems, having a professional forecasting and supply planning tool like Slimstock will make your job orders of magnitude easier. See how Slimstock can help your company optimize inventory during steady demand and disruption.   

Inventory Balancing at Multiple Locations  

If you have stockouts in one market and excess in another, shifting stock between locations is usually the cheaper option instead of buying more. However, while this might seem simple to do it’s important to understand the demand of each market so that you’re using stock your efficiently. Important factors to consider are how each market has been affected by the disruption in terms of job loss and customer demographics, distance from warehouse and supply on hand. 

Your next priority is to adjust your baseline demand and safety stock strategy for locations that are open. Previous demand for the item or similar items is a good starting point for baseline demand. For safety stock, include factors like seasonality and supplier production capacity. If the data is available, other factors can include customer demand from previous shortages/stockouts, and consumer behaviour from similar markets that have opened before yours (e.g. Western Europe). 

Slimstock customers can use the excess stock calculation to help with balancing after the forecast has been shifted up or down appropriately. If you’re only using spreadsheets, or ERP & Excel, you’ll need to calculate your inventory manually. This can mean having employees count what’s available, or visiting sites personally to do so. 

Reopening When Stock Has a Limited Shelf Life 

If you’re working with a product that has a limited shelf life, your first concern is expiration dates. How much product do you have, and when does it expire? If your stores and warehouses follow recommended first expired, first-out (FEFO) stocking practices, that should make it easier to understand the scope of your inventory’s shelf life.  

Once your expiration date(s) have been identified, you need to make a plan for them. As already outlined in this article, it’s usually cheaper to shift stock between locations. However, shipping time for limited shelf life products must be factored in. If you have a product that will expire in 60 days, but it  usually takes 2 weeks to move it between locations, will your expected turnover rate justify the cost of shipping it?  

Another challenge we’ve worked with customers on is the product that was ordered weeks or months ago but is only now on the water, or product that has been released after a longer than usual hold in customs. Once again, your goal is to find the best fit based on demand and distance. However, if travel time is too long or shifting product isn’t feasible then it’s time to get creative. 

Options for Moving Product Near Expiration 

Depending on where you’re located, it’s worth it to look into the following options rather than let stock with limited shelf-life expire. 

1. Discount Outlet Stores 

Discount outlet stores that specialize in buying irregular and older stock may be interested in your inventory that’s nearing expiration. If the terms of the sale are preferable to write-off, then it can be worth it to sell at a lower price. 

2. Subscription Box or Meal Services 

Subscription services like Blue Apron or Hello Fresh are meant to be used soon after they arrive. Other subscription services now exist for nerds, gamers and other pop-culture interests, so depending on your stock this may be worth investigating.  

3. Buy one / get one sale or increased employee discounts.  

Everybody likes a deal, and if offering large discounts makes more sense than writing off stock as obsolete then it’s best to start preparing as soon as possible for a sale for promotional events. Slimstock customers can designate sale and promo items so that they don’t skew regular demand forecasts, and spreadsheet users need to take this into account as well.  

4. Samples and Promo Items 

If a certain percentage of your stock is earmarked as samples or promotional giveaway items, this is an ideal use for any ageing stock you have. Make sure that this stock doesn’t get counted as a sale, as it can skew demand and future order size. 

5. Donation 

Many organizations will accept ageing stock that is not yet expired. If your company has a social mission, donations can play a part in it. Depending on the type of product and organization, donations can also be tax-deductible, usually up to a certain amount. 

If you’re unable to utilize any of the above methods and are forced to write off stock, see our article on best practices for removing obsolete stock from inventory.   

If this seems overwhelming, Slimstock is here to help! Our experienced consultants are happy to talk with you about strategies for reopening, or any other supply chain questions you have.