It is not easy to handle a company, let alone solve all the problems that it faces. Careful decision making is required before actions are implemented so that mistakes will be avoided. For manufacturers, proper management must be done and skills must be developed if one wants to become a good manager. One of the problems that are most commonly feared by a lot of manufacturers is excess inventory. This is a huge problem especially for those who really want to stay competitive in the market. There are a lot of factors as to why excess inventory happens.
- Inaccuracy in Forecasting. This is a very important in terms of monitoring your inventory. A good team should be able to predict how the market will run. When you have a good forecast, you will be able to anticipate whether you need a supply for this or whether you already have enough in the shelves. As such, if you do not need to increase your supply for one product, you can just focus on another. Adding a lot of products without demand will cause an excess in your inventory. Make sure that you have a good system for the best forecast.
- Poor Quality. Needless to say, consumers will look at the quality of your products primarily. If they think that your products do not have the best quality among your competitors, then they will not buy your products. You will not be able to sell them and they will only be there in your shelves until they are not sellable anymore. To avoid this, make sure that you stay true to what you have promised. Give them the quality that they deserve so that they will keep coming back for more of your products and services.
- Poor management skills. The role of the manager is also of utmost important. He or she is the driving force that will steer you to the right direction. He should be able to formulate a good monitoring plan that you can use. Also, proper scheduling of checking of the inventory should be done so that you will be able to track how much is going in and how much is going out from your shelves. As a manager, you should know everything that is going on so that you can troubleshoot easily if the need arises.
Excess inventory will result to a lot of losses especially in terms of your finances. The products that should have been converted to profits will stay there in your shelf forever until they are not worth anything anymore. This will be a huge setback for your team especially if you are in dire need of profits. Business will not run properly when you have excess inventory because the imbalance will do more harm than good. There are even cases wherein the entire operation has been disrupted because of the lack of funds. A product should be converted to cash immediately even before its value depreciates.