Ways to manage obsolete inventory
It is bound to have some inventory left over at some point of the business. Inventory is referred to a list that is used for tracking every item. In case of business, inventory is the list of items that haven’t been sold and still in the possession of the company. It is also considered as assets for the company according to modern rules of business accounting. After a certain product cycle, the amount of inventory that is left without any value is known as obsolete inventory. Obsolete inventory is a matter of high concern for the company as it occurs due to mismanagement of the inventory system. It also means that a certain amount of money is stuck in the inventory that the company is unable to use. So the solution to this problem is to liquidate the obsolete inventory as fast as possible to turn the excess inventory to cash money.
Companies around the world that have food as their inventory item, have to be better in inventory management than other companies out there. When it comes to food inventory, companies have to be very careful as their food gets rotten, smelly, and unusable. They get a very short period of time for food liquidation, obsolete inventory sale or use it for other purposes. Most restaurants sell out their products before their offer is finished as the left over are most likely to get wasted. The only way that is left to save the at least some of the cash is to sell out the excess inventory to some other merchandise buyers. Several buyers are available who are interested in buying obsolete inventory if the quality is still usable.
There are some other ways to manage or dispose of obsolete inventory. Those are mentioned below.
1. Selling it to other potential customers: Sometimes the inventory is left because that was produced for specific customers and they did not purchase it. In this type of cases, you should search for other potential customers who might have similar requirements for the same type of products.
2. Modifying the inventory: You can try to modify the existing inventory to create new products that can be used as fresh items for sales. If the cost of modification is estimated below 25% of the actual cost of the inventory then it might prove to be a great way to get rid of obsolete inventory.
3. Selling at a low price: it is always better to sell the inventory at a low price in comparison to keeping obsolete items that have no other use. If you can get more than 25% of the original value, it will certainly be better than letting it go to waste.
Several other options are available to liquidate obsolete inventories. These ways are very helpful to get rid of the excess items that are no longer profitable for your company.
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