Image of a manager viewing charts of stock levels and profitability. How to optimize warehouse management cost-efffectively

How to optimize warehouse management cost-effectively

For manufacturers and producers, one of the most sensitive issues is how to optimize warehouse management, or stock management, cost-effectively.
The two main problems that companies encounter are stock depletion (being out-of-stock) and having an accumulation of stock or even excess stock (overstocking). 
While these are opposing issues, they are both very serious, and therefore require management by a highly expert in-house logistical organisation or, in the absence of this skill set, by entrusting the task to professionals.
  • Being out of stock incurs a virtual cost related to the loss of revenue from goods requested by customers but not in stock.

  • Excess stock accumulates unnecessary items that use space in the warehouse and also represent an insurance risk. In addition, it is a current expense that has already been borne by the company, which will not generate profits, but instead results in losses from unsold goods.

Replenishing depleted stock timeously

Generally, stock depletion can be avoided by partnering with several reputable and reliable suppliers. These suppliers should be able to:

  • guarantee full supply when you need it and not leave you without the goods required by your customers

  • allow you to collect the items whenever necessary,

  • offer to keep vital items available on standby, potentially even at a supplier-partner that will earmark them specifically for you,

  • invoice you only when stock is ordered

While these characteristics may seem too good to be true, a serious and professional distributor partner will offer its customers this kind of service — verifiably!

Here are the steps a professional independent distributor would follow:

  • find the part the customer wants through specialist platforms, conducting the research as though the warehouse were their own;

  • estimate actual delivery period or lead time to obtain the required items and how much the product is likely to cost, including shipping charges;

  • if the customer approves, proceed with the order;

  • for electronic products, testing the products to guarantee the authenticity and validity of the components is essential and cannot be overlooked!

Monetizing stockpiles

Moving to the opposite problem, there are two methods for dealing with a stock accumulation or stock excess, and the choice depends on the method that best suits your business approach. Specifically, you should determine if you prefer to liquidate, i.e. monetize the stock quickly even if it means losing a little more on the deal; or do you prefer to realize more money for the stock, even if it takes a longer time — acknowledging however that time is also money?

  • If you favour the first approach, the solution is to sell the excess stock in bulk batches of items where the average earning tends to be in the region of 10% to 20% on cost.
  • If you prefer the second approach, you can sell one item at a time for a higher average profit (50/60%), but must wait for a legitimate customer that is looking for that specific item.

(Note that these profit percentages are purely indicative and vary depending on the prevailing market conditions.)

Using both methods (bulk sale of articles and individual sale) gives you an advantage over your competitors.

Have a surplus of stock? What to do:

First, you must first find a buyer using international web platforms with global visibility, which is not as easy — or guaranteed — as it sounds. It is more effective if you have a partner who works with these platforms on a daily basis and can therefore help you avoid nasty surprises from potentially unethical or even fake buyers.

Businesses that have problems with excess stock need a trusted partner to help them sell the excess goods that would otherwise remain unsold. By means of their experience with these global web-based e-commerce platforms, the preferred partner assists its customers to find the best buyers thereby significantly reducing the customer’s production costs.

An organised and precise distribution service

Trustworthy and professional partners not only help their customers to solve the problem of surplus stock on site, but also manage their own warehouses to the highest standards.

Electronic Partner specializes in the independent distribution of electronic components, conducting business according to this logic and seeking the best conditions globally for our customers. Whether we work with new merchandise, fully guaranteed by the manufacturers, or have to source obsolete or rare, but 100%-original, components, we only use proven suppliers that provide a warranty of up to 1 year and deliver within 5 to 7 days.

Do you need to find parts urgently, or do you need to manage your excess stock? Contact us today to see how we can help you!

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