Ways to Reduce Inventory Write-Offs

An inventory write-off is a formal recognition that a portion of a company’s inventory no longer has value. Sometimes inventory write-offs are necessary. However, if the inventory write-offs are large and frequent, it may indicate that a company has poor inventory management. So, how do you reduce inventory write-offs? Let’s look at some important tips on how to prevent and reduce inventory write-offs with a proper inventory management system in place.

Avoid Excess Purchasing

It’s easy to get excited and manufacture a large number of products to sell, but if you don’t carefully measure your expectations, you could end up with dead stock that isn’t selling or that you need to sell at a discount just to get your customers interested. Every business must know how much inventory is required for each ordering season and ensure that they do not carry too little or too much stock. When inventory sits in your warehouse it ties up funds and raises your storage costs. This can inevitably lead to write-offs if you cannot move that inventory soon enough. Monitoring your inventory records accurately through software can help you avoid this mistake. You can look at the history of your orders to make informed purchasing decisions.

Create an Inventory Reserve

A helpful way for you to avoid inventory losses is to create an inventory reserve. It may not prevent your inventory items from losing their value but understanding historical selling data and current market conditions can help you make predictions about your inventory. This reserve will be accounted for as an expense on your income statement.

Utilize Write-Downs as Needed

The reason why companies in your industry are successful is that they have efficient inventory management. Implementing an inventory management system (IMS) can help you identify the root cause of slow-moving inventory and find ways to reduce excess and obsolete stock. Inventory management also helps you sell off excess and obsolete stock more effectively through the process of write-downs. By reducing the price of an item, you can still make a profit. But failing to find a way to utilize obsolete stock will lead to a write-off where the product is considered a loss to your company.

Revise the Order Cycle Regularly

Another option to prevent inventory write-offs is to simply order in smaller batches and cycles. Smaller and more frequent order quantities mean you store less inventory in your warehouse. As long as you have sufficient inventory to meet customer demand and prepare for peak seasons, you will be on the right track. However, before you can do this you must understand what your order frequency history is. You also need to consider if there will be any loss of transportation efficiencies if you reduce your batches, and how it will impact the labor workload at distribution centers. Once you determine your order frequency, these answers will present themselves, but you must have a thorough understanding of your supply chain costs and capabilities before switching to this strategy.

Some options for implementing this strategy include the following:

  • Reducing setup time and costs
  • Re-evaluating cost of holding inventory
  • Understanding warehouse storage procedures
  • Understanding cost trade-offs of labor, transportation, and inventory

Eliminate Obsolete Stock

Do you have stock sitting at the back of your warehouse taking up space in your facility? Is it being kept there because no customers want to purchase it or because your employees are uninterested in organizing it? If the stock has been taking up space in your warehouse for a long period of time you need to find a way to rid your warehouse of it. Finding a way to deal with these items will result in good long-term financial results. Some options include selling the items at a significant discount to your customers, offering it as an add-on when a customer purchases another product of yours, or taking the items back to your manufacturer for recycling or reworking the raw materials.

Choose Tenax for Inventory Management

Getting a better understanding of your products and how they move throughout the supply chain is vital to effectively running a retail company. Each item needs to be tracked and measured to see how customers respond to it and how high or low demand is. When items you hold lose their value, the write-offs will be deducted from your reserve, but you don’t want this to become a habit. With the help of a third-party logistics provider, you can have the professionals handle the time-consuming process of inventory management, so you can focus on building and fortifying relationships with your customers.

Real-time inventory management can help you keep better track of your orders, sales, and locations of your products at each of your warehouses. If you want to implement robust inventory management software, our 3PL company can help you. Tenaxx Logistics offers services such as real-time inventory management, e-commerce fulfillment, fulfillment solutions, and fulfillment markets. You can contact us by e-mail at info@tenaxtransport.com or by phone at 519-260-2738.

Prepare your Supply Chain for Peak Holiday Season

Experts say that most companies make more than 20 percent of their annual revenue during the peak holiday season- but when service failures occur during peak season, it can cost you a great amount in terms of delayed in customer shipments as well as stock-outs due to poor inventory management.

How retailers can address supply chain challenges?

Stock-outs put a great impact on your brand reputation and future business activities. Forcing your customers to buy a product – which is out of stock in your warehouse – from a competitor diminishes their faithfulness. The other challenge comes up when consumers who buy online and return the item in-store, called Omni-Channel consumers, put the pressure on retailers to have products both at the store and in the warehouse, in the right quantity and at the right time.
To address these challenges, retailers are trying modern distribution strategies that not only improve forecasts but also facilitate inventory movement across multiple shopping channels. Retailers may need the services of a third-party logistics provider on the basis of the distance between your store and the warehouse. Here are some tips that will help ensure good relations with your suppliers, 3PL provider, and customers:

1. Inform your 3PL vendor about new changes and purchase orders

As a retailer, you should keep constant communication with your third party logistics vendors and suppliers and inform them of any changes in purchase orders and keep them updated. For instance, informing them of advance shipping notices, or any other changes regarding receipt items, quantities, or dates on purchase orders, will give the 3PL provider enough time to prepare and deliver the item as per your needs.

2. Make room for flexibility with your carrier

You cannot always plan your project sales accurately using data from previous years. Make sure your 3PL provider takes the responsibility for last-minute, just-in-time deliveries to your store to avoid any stock-outs of certain items. To face such unforeseen incidents, you should develop a relationship with your 3PL vendor that allows for flexibility and can adequately handle last-minute changes.

3. Accurate Forecasting

Make realistic projections for order volumes and calls by hour, day, week or month in advance to ensure your orders are always available in the right quantities and at the right time and to give your 3PL provider enough time to prepare for it.

Final Thoughts

With these wonderful tips, you can get prepare for the peak holiday season and manage your inventory more efficiently. If you’re looking for 3PL warehousing services, look no further than Tenaxx Logistics. We have the space, services, modern equipment, and commitment to customer satisfaction needed to make your transition to the world of warehousing a smooth one. To know more about our warehousing services, contact us today.

Essential Guidelines for Warehouse Inventory Management

Managing inventory operations can make all the difference to productivity within your supply chain. By organizing your warehouse operations effectively, you can get benefit such as
• Maximize the use of storage space
• Save time
• Keep the record of stocks
• Fewer Overheads and increased cost-benefit

You can get all these benefits by implementing some very simple steps within your workflow. Let’s take a look at some of the best ways of achieving a more managed warehouse inventory.

• Arrange the warehouse properly

There are certain stocks which used more frequently than other stock, plan your warehouse space with these stock in mind. Always put the most commonly used items in an easy to access location. By making all these necessary arrangements, you can save the time it takes to load and unload such items.

• Demand forecasting

Some times of year will be busier than other times, especially the peak season, so plan ahead and accordingly for your business seasonal demands. Forecast the demand based on past sale records and ensure that you have enough stock for that time period to avoid any delay.

• Be Flexible to the change

Business demand change over time, what may have worked for your business earlier may not work in later years. Examine how your warehouse operations carry out every year, check your stock records and new changes in your business throughout the past few years. Evaluate every area very carefully to make the necessary changes to run it more effectively.

• Implement Cross Docking

Cross-docking is a form of supply chain management process in which the products from a supplier or manufacturing unit are shipped directly to a customer or retail chain without any requirement for the storage of goods in the warehouse in between. That means a quick turnaround for your business, saving time and money. It is not ideal for all needs, but it saves cost and time for a certain stock.

• Give the right training to your staff

A staff that understands warehouse inventory operations will keep it better and manage the business more efficiently. By having knowledgeable staff, you can ensure that your workforce maintains a properly organized warehouse inventory.

• Label your items

Put SKU(stock keeping unit) numbers on every item in your stock in the warehouse. It clear labels ensures that it’s easy to identify products, before moving or transporting them. A barcode system can also be used, depending on the needs and size of your business. Whatever you use, ensure it’s up to date and that no numbers are re-used inappropriately.

ADVANTAGES AND DISADVANTAGES OF DROP SHIPPING

Drop-Shipping

The dropshipping process is different from the traditional fulfillment process in that the merchants don’t have to keep the inventory. Instead, the vendor represents the inventory from your side. You only make a purchase from them when any customer place the order for some items and you sell them through the dropshipping process.
Dropshipping allows you to sell items without actually involving in the handling of inventory and shipping the items to the customer by yourself. This becomes a very flexible and time-saving order fulfillment process for merchants.
To know more about drop shipping visit

The Advantages of Drop Shipping

There are numerous advantages to drop-shipping your products, which include:

1. Not keeping an inventory on-hand:

One of the main advantages of using drop shipping is that you don’t need to keep the inventory on-hand. You only buy the inventory from your vendor when you sell something to the customer, hence you do not need to worry about managing the inventory.

2. No storage space required:

With the dropshipping process, you don’t need storage space as you don’t keep the inventory on-hand. Hence, your business will have little to no overhead costs of managing and renting the storage space.

3. Grow more business:

When you store and sell your own inventory, there can be many limitations, such as limited stock of goods and limited shipping location. But, with drop shipping, you can sell a wide variety of goods which represents by various vendors as well as you can ship the items to many locations. Thus, in this way you can grow more business.

4. Unlimited Products:

Dropshipping gives you the flexibility to sell those items which are not present in-store or kept in local inventory. It appears to your customers that they have unlimited product options. This is very useful for great customer experience.

All of these benefits are great. But, before you get ahead of yourself and start to drop shipping, you need to know about the other side of this fulfillment process.

The Disadvantages of Drop Shipping

Dropshipping has some considerable issues that you need to take into account before choosing a dropshipping option.

1. Low product margins:

As the product directly ships by the vendor to the customer without the involvement of the merchant selling the products, the markup on the price keeps on increasing. It’s how vendors make their profit in this business strategy. Although, in a competitive market, you have to continually lower your price to compete. This might can results in loss sometimes as you have to sell at very low margins.

2. Finding the right vendor:

Finding and creating good business relationships with the right vendors with wide product variety and right prices can be difficult. As dropshipping becomes more feasible for more vendors, you’re going to have to scan through a lot of posing wholesalers offering “wholesale” prices.

3. Relying on vendors:

The best and worst part of dropshipping is that you rely on your vendors to always have products in stock and to make correct shipments. But, what if they don’t have an item in stock that you just sold to your customer? Or, their shipment doesn’t reach the customer on time? Who will be responsible for answering the customers? As the vendors are completely invisible to your customers, hence it is your responsibility to handle these situations and cover the costs when you need to.

4. Using multiple vendors:

Merchants will often make deals with multiple vendors to get a wide range of products, ensure the products are in stock and select the best prices for different products, and ship from the nearest location to customers. It is not as easy as it looks, managing multiple vendors can be very complex. If you don’t do it right, it can cost you your business.

5. Shipping costs:

Keep a check on shipping costs when you’re using multiple vendors to ship different parts of one order, or product. If not handled carefully, dropshipping isn’t cost-effective for you anymore.
Dropshipping if done correctly can make a big difference in your business and its bottom line. But, if not handled well, it can cost you your business.

The Bottom Line

The benefits of drop shipping make it an attractive and flexible order fulfillment solution. But, there’s also a bad side of drop shipping that you must take into account. Ultimately, the decision on whether or not dropshipping is the best choice for you depends overall on your business type and requirement.

Contact Tenaxx Logistics

Want to find out more about our order fulfillment services? Contact Tenaxx Logistics today by filling out our online form or call us at 519-260-2738 and let us know what your business requirement. We’ll talk to you about possible shipping requirements and give you an accurate estimate for the services you need.

Check out these articles for further reading:
What is Drop Shipping?
Common Order Fulfillment Issues and How To Fix Them

Key Stages of Order Fulfillment Process

Order fulfillment is an important part of the supply chain process. It is the process of receiving, processing, and shipping orders to the end customers. It’s possible to handle fulfillment in-house or outsourcing it to a third party logistics company that handles the process for you.
To maintain quality control and maximize profit as much as possible, many smaller operations opt to handle their own order fulfillment process. But if you want to focus more on the main fields of activity, and work more efficiently and productively, opting third-party logistics is the best solution. The order fulfillment process varies according to the type of business, inventory management, and supplier selection and can become highly complex. Here are mentioned the key stages of the order fulfillment process:

Receiving Stage

When you receive inventory from suppliers and manufacturers at your warehouse. the next steps will be:

1. Count all the items which you have ordered.
2. Check to make sure no items have been damaged during shipment.
3. Add the record of new inventory to your warehouse management software to keep the count, sales numbers for each item and also to track the location of items.
4. Add SKUs/barcodes to every item you received if they aren’t already labeled correctly.
5. Place individual items into ready-to-deliver kit packages, if necessary.

After following all these steps carefully, the next stage is to shelve it in the warehouse. By properly storing the items in the warehouse, you can maximize the speed and accuracy of your order fulfillment process thus can increase warehouse productivity.
Store each SKU in its own box, with overflow stored in another area of the warehouse. Keep SKUs that sell most often in boxes closer to the packing stations for easier access.

Processing Phase

The order processing phase starts when an order is received from the customer. Typically, fulfillment software integrates with shopping cart software so that when someone places an order online, the order is automatically sent to your fulfillment software at your warehouse, too.
After receiving the order, items are picked by staff and taken to an order packing area. In the packing area, firstly the items are checked for quality and packaged with the best materials appropriate for the items. Packing slips and other information are added, then the box is sealed and moved to the shipping station.

Delivery Phase

Once the order is in the shipping station, it’s ready for delivery to the end customer. In the shipping station, the package is weighed and the best delivery method is selected. Once the package is ready to deliver, the shipping station will update the status of an order to make sure customers can track their orders until they are delivered. After the order has been delivered to the customer, it can be considered fulfilled.

Choose Tenaxx Logistics for Your Order Fulfillment Services?

Want to find out more about our order fulfillment services? Contact Tenaxx Logistics today by filling out our online form or call us at 519-260-2738 and let us know what your business requirement. We’ll talk to you about possible shipping requirements and give you an accurate estimate for the services you need.