Reduction of Finished Goods Inventories

Let’s start with finished goods inventories. How much finished goods inventory you should have depends heavily on your company’s business model.

If you produce to order, ideally you should not have finished goods in inventory. Your products should be completed on time and shipped and invoiced to your customers immediately. If you see finished goods inventory on your balance sheet, take a closer look because there is potential here.

If you sell your goods from stock, take a thorough look at your inventory levels. How high does your delivery availability really need to be? A buyer personas analysis can provide information on the need for change. Compare your inventories with call-off patterns of your customers. Overstocks of certain products are just as undesirable as shortages of other products. Take appropriate countermeasures with your supply chain. This should be an ongoing, ideally IT-supported process. You should also identify slow-moving items on a cyclical basis and try to market them in special campaigns.


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