Even in these days of supply chain issues, product shortages, and frequent stock-outs, excess inventory is still a concern for many warehouses, retailers, and distributors.

“Excess inventory” is exactly what it sounds like – any inventory that has been overstocked and remains unsold, whether due to inaccurate projections of consumer demand, canceled orders, economic downturns, or similar factors. A number of external factors and market trends can contribute to inventory overages over time, but at the end of the day, this is still inventory that needs to be managed and stored properly.

Of course, with everything else you’re already storing in your inventory, this can be easier said than done!

How to Identify Excess Inventory

It can be tempting to look at any items that you haven’t sold as “excess inventory”, but the truth is a little more nuanced than that.

You can tell if an item can be considered excess inventory by checking any combination of the following metrics:

• Slow inventory turnover (how many times the item sold out and was replenished during a specific time period)
• Larger total days on hand (the amount of time the inventory is in storage before it is sold)
• Low inventory to sales ratio (how much stock you have of a given item vs. the number of sales)

If you can identify any items that meet these criteria, you might just have some excess inventory on your hands – but what can you do about it?

How to Manage Excess Inventory In Your Warehouse

Managing excess inventory can take many forms, but there’s a few strategies that can apply to any warehouse that runs into an overage of certain items.

The first is to create a space for unsold goods. In much the same way that we often find ourselves rearranging our warehouse to keep the most popular items easier to access and ship out, it may prove helpful to create a space using industrial wire shelving or high density warehouse storage to hold onto slower-moving items until you can figure out what to do with them. This will let you free up space for the more popular items, as well as giving yourself an easier way to track and manage the goods that aren’t selling through as quickly without having to disturb or relocate the items your warehouse thrives on.

As you search for the best place to keep your excess inventory, begin using more vertical space. If you have a number of slower-moving items that don’t get picked as frequently, you could consider storing them farther up on your racking to keep them out of the way of the goods that sell through more often.

Finally, once you’ve relocated your slower goods, you should consider reallocating them to other facilities. If you operate multiple locations, you could shuffle the excess inventory to a less high-volume location to keep them out of the way. You may also be able to sell these goods as a bundle to other distribution centers, or even to other retailers as able to free up space – and try to make some money back in the process.

Managing and identifying excess inventory can be a difficult task at first, but once you’ve started to relocate these slower-moving items, you’ll start to appreciate how much easier the rest of your warehouse starts to come together.