Companies are feeling the impact of excess inventory amid ongoing supply chain disruptions, inflation, and talks of an oncoming recession—and it’s a problem that’s only going to continue to get worse.
Are excess inventory challenges here to stay?
Although recent news headlines have drawn special attention to the excess inventory woes of big box retailers like Target and Walmart, these problems aren’t new and have actually plagued both brands and retailers alike for decades. Companies have implemented innovative solutions to improve efficiencies across all areas of the supply chain—but when it comes to aged inventory—spreadsheets, siloed legacy systems, and manual processes still remain the status quo.
“Global brands are still relying on the same manual, painstaking processes that they used thirty years ago. Since sales teams don’t have the visibility or automated tools they need to go to market as efficiently as possible, they waste precious time and lose the potential to move products and recover cash faster,” says Ronen Lazar, Co-Founder and CEO of INTURN, a SaaS solution for managing and selling excess inventory.
There are several challenges with using spreadsheets to manage and sell excess inventory. For example, inventory data often needs to be pulled in manually from multiple sources or acquired from other team members. This process can be so time-consuming that by the time sales is ready to go to market, the inventory data might already be either inaccurate or incomplete. This further complicates and prolongs negotiations with buyers, increasing the potential risk of overselling.
Excess inventory is also often the last thing that sales teams want to deal with at the end of the day. As a result, they might simply focus on trying to offload the inventory as quickly as possible, as opposed to taking a more strategic approach leveraging historical sales data. Although this may alleviate some pain points in the short term, the reality is that many companies are leaving a lot of money on the table by being reactive, instead of proactive, when it comes to optimizing margin and sell-through.
Even with the best planning, excess inventory is inevitable.
Technology solutions have drastically improved the planning capabilities for supply chain teams, but even the most sophisticated planning cannot account for external factors that are often outside of anyone’s control. Market volatility, forecasting errors, changes in consumer spending habits, unexpected weather changes, and so forth are all examples of events that can quickly lead to the unpredictable buildup of excess inventory.
For example, the rise and fall of COVID-19 had drastically shifted consumer spending habits, forcing CPG brands to catch up amid strained supply chains. What first began as severe shortages for essential product categories quickly led to overproduction and excess inventory as consumers returned to experiential spending. Most recently, inflation and market volatility have shifted spending habits as consumers once again opt for buying essential products.
“Back in 2020, we anticipated that brands would be experiencing inventory challenges due to ongoing supply chain disruptions and shifting demand. We’ve certainly seen an uptick this year in excess inventory levels in clients across industries compared to previous years,” says Thomas Zanetich, Senior Director of Client Success at INTURN.
Zanetich further explains that companies with no excess inventory in prior years were now suddenly faced with figuring out how to offload it and recover margins. He states, “More and more companies are reaching out to us in order to deal with unprecedented levels of excess inventory. It’s not a matter of ‘if’ your company will have excess, but rather, ‘when’ and whether you will have an effective solution for addressing it when the time comes.”
CPG brands Unilever and KIND find success in optimizing excess inventory.
A leader in the CPG space, Unilever partnered with INTURN in 2019 to implement their INTURN 360 solution to optimize their slow-moving and obsolete goods business. Prior to their partnership, Unilever was experiencing rapid growth of slow-moving and obsolete inventory. The factors leading up to this build-up mirror the common challenges that many brands experience: double-selling due to lack of real-time visibility into available inventory and sales activity, reliance on manual and error-prone processes, and lack of historical insights and data to drive strategic decisions.
With INTURN 360, Unilever has experienced 4x growth in sales and a decrease in the length of their sales cycle by almost 70%, and today, they can close transactions with buyers from start to finish in less than half a day.
“Supply chain resilience and agility are more important than ever, and slow-moving and obsolete goods continue to be a key priority for us. With the visibility and tools that INTURN 360 offers, we’re positioned to effectively pivot at any given opportunity,” says Steve Lonison, Business Waste and Smog Manager at Unilever.
Similarly, KIND first partnered with INTURN in 2020 to optimize inventory logistics and has seen successful results. Their partnership with INTURN also directly helps the brand minimize food waste which ladders up to one of KIND’s core missions of being kinder to the planet.
“Collaborating with INTURN has been proven to be highly impactful as they’ve helped streamline what can be a complicated and arduous process. For example, truckload management of excess inventory is an area that was a manual process for us, and the new INTURN feature has addressed this issue and created efficiencies for both KIND and our buyers,” states Carlos Hurtado, Director of Sales at KIND North America.
The SaaS solution provides companies with a centralized system of record for managing and selling aged goods, eliminating the problem of inventory data living in disparate systems or locations. INTURN 360 also provides users with tools to automate and streamline processes related to curating inventory assortments for buyers, such as distributing products, or adjusting quantities and pricing.
One of the biggest benefits for brands leveraging the INTURN 360 solution is the immediate access to historical sales data and actionable insights. Users can more easily understand what product categories, quantities, and pricing sell well with specific buyers, enabling them to go to market faster, as well as increase their margin recovery and sell-through.
Charlie Ifrah, Co-Founder and Chief Product Evangelist at INTURN further states, “Our goal is to encourage brands across industries to look at this part of the business with a more proactive and strategic mindset. Excess inventory doesn’t always have to be the last item on your ‘to-do’ list—instead, there is a huge opportunity to maximize profits if you can optimize it appropriately.”
About INTURN
INTURN 360 empowers brands to sell slow-moving and excess inventory faster, maximize recovery, and achieve zero waste. Brands have seen success in utilizing INTURN 360 creating a superior return-on-investment: 10% + improved product margins, 10 x Faster speed-to-market, and 85% reduction in operating cost. With the #1 solution for slow-moving and excess inventory, brands have the tools to centralize data, streamline workflows, gain supply chain visibility, and meet sustainability goals.
