20 Expert Tips & Strategies on How to Reduce Inventory

20 Expert Tips & Strategies on How to Reduce Inventory

Why is reducing inventory important? Well, most companies estimate inventory carrying costs between 20% and 35% per year. Inventory takes on a lot of different identities within a manufacturing company, depending on who’s doing the looking. An accountant sees inventory as an asset, a controller sees it as a liability, a production supervisor considers it a safety net, while a materials manager finds it a tightrope.

One common aspect of inventories that everybody agrees on is that holding it can be costly. Here are 20 ways to reduce inventory:

20 Ways to Reduce Inventory

1 – Improve forecast accuracy.

2 – Re-examine service levels.

3 – Address capacity issues.

4 – Reduce order sizes.

5 – Reduce manufacturing lot sizes.

6 – Reduce supplier lead times.

7 – Reduce manufacturing lead times.

8 – Improve supply reliability.

9 – Reconfigure the supply chain.

10 – Reduce the number of items.

11 – Eliminate questionable practices.

12 – Dispose of obsolete inventory.

13 – Convert obsolete inventor into current inventory, then sell it. It may require changing components to bring the product up to current specifications.

14 – Return the product to the manufacturer for credit, especially if you are a significant customer. Restocking costs can be less than carrying costs.

15 – Sell obsolete inventory to present users. Run a list of all users of the product and offer to customers at a discount.

16 – Open an employee store.

17 – Open an outlet store.

18 – Use an online outlet.

19 – Sell parts as spares.

20 – Export the product.

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