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No need to panic; it’s not what you’re thinking! And no, we’re certainly not talking about anything as dramatic as human blood (you can relax now; we promise!). However, if you’re part of the retail industry, particularly moving products off the shelves and keeping inventory flowing, you may unknowingly be involved in a different kind of "warehouse crime." Sounds intriguing, doesn’t it?
This “crime” isn’t about theft or damage but something far more common—slow-moving stock that clogs up your warehouse, silently draining resources and affecting your bottom line. Many retailers face this problem, and it can have a more significant impact than you might realize.
Wondering how you could be part of this without knowing? Keep reading, and we’ll walk you through how it happens and, more importantly, how you can fix it.
Many retail-focused businesses find themselves in situations where they are no longer able to sell a specific item (Stock Keeping Unit—SKU). This could be for a variety of reasons.
Some of the reasons are mentioned below:
Regardless of the reason, you have a product that may be as good as dead. In retail terms, one might refer to it as ‘Dead Stock.’ This is stock that is unlikely to sell and is taking up space in your warehouse while still being listed as an asset on your balance sheet. It's quite a cruel joke!
If the individual SKU had a life of its own, we could perhaps blame them as the poet Kahlil Gibran has said, “The murdered is not unaccountable for his own murder.”
To give life to the SKU, a system that can breathe life into the stocks you keep - a retail-focused ERP or a basic inventory system- can help. Nevertheless, you can still overcome by following the below
Now, there are two ways to look at the situation:
Two different issues. Two different solutions. Two different roads to travel.
In this blog, let’s focus on the first part. Being proactive, after all, solves most of the problems.
The first step is to make sure you have a simple tabulation, as below, every time you bring items into your store or warehouse. This is the beginning of managing your stocks well.
Once this is done, it is all about making sure you take time to review the stocks you own on a periodic basis. The easiest way to do this is to get a regular report to assess the current stock and the ageing of each stock-keeping unit(SKU).
This helps you gain an upper hand and assists you in making decisions to ensure the relevant stocks are moved out as soon as possible.
While stocking in goods, the biggest problem most businesses need is storing it right.
If a first-in, first-out (FIFO) arrangement for storage and retrieval is not possible, it can cause significant issues, especially when dealing with products with fixed shelf life. In practice, implementing FIFO is more challenging than it sounds. When there is a sudden influx of items, forklift operators tend to prioritize clearing materials from the receiving bay, often placing items wherever there is available space in the warehouse storage area.
Therefore, it is ideal to have dedicated zones for placing different categories of SKUs and further placing them so that the first lot is always picked first. Still, theoretical solutions are only sometimes easy to implement practically in the store.
That is where you can use a simple report as below to monitor your current stock levels:
The most important thing to note here is that against each lot of the same item, you should be able to track the ‘aging.’ This is a crucial way to keep a tab of items that are lying unsold. The ‘aging column’ and the days to expiry column are key data to look for.
Once you build a practice of regularly reviewing a report like the above, it will help you be aware of items that may be slowly moving toward the dreaded dead stock category.
Now, you can take necessary action, like offering special promotions, ensuring product bundling, or at least ensuring that the stocks are moved out of the warehouse racks and placed on your showroom shelves!
Have you encountered similar challenges in your retail operations? Are you looking to avoid such situations proactively in the future? Let's connect!
We would be happy to discuss how HAL ERP’s retail management solutions can help streamline your processes, enhance inventory control, and optimize your operations.
Get in touch, and let’s explore how to work together to achieve your goals.
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