Dead Inventory

I was trading e-mails last week with a friend of mine in the foodservice industry, and he mentioned an issue his company was having with some dead inventory—product in house that they couldn’t sell. The next day, I had someone else question me about the same subject.

First, it helps to understand why you ended up with more than you wanted.

  • Did you misunderstand the wants/needs of the market?
  • Were you overpriced?
  • Did you buy in on a deal that you couldn’t sell through?
  • Was it supported with marketing?
  • Was it the right marketing?
  • Was there something wrong with the product?

The best way to do that is to talk directly with your intended customers.

Once you understand the situation, then you can figure out what to do next. If everything was done properly, and most likely it wasn’t, then your best bet is to simply write it off and get rid of it the best way possible.

But maybe some things could have been done differently or better. Perhaps you had a couple of missteps along the way. Then you can take another run at it.

This is a different discussion than sunk costs. I am not advocating throwing good money after bad simply because you have too much invested.

What I am suggesting is that sometimes, your business is not in sync with your customers, leaving you with overstock (and sometimes under-stock) situations. When that happens, having a conversation with your customers can lead you to the right solution. Whatever that may be.

Of course, starting the process with them goes a lot farther than going to them when you find yourself in trouble.

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