How Excessive Inventory Affects Distribution

by Michael Kotendzhi | Warehousing, Logistics

Storing excess inventory can have a negative effect on your business or company. To get a better understanding of why that is, continue reading this guide for how excessive inventory affects distribution.

Your Profits Decrease

Most businesses want to get rid of excess products as quickly as possible. They may do this by putting their product on sale or clearance to entice clients and customers to buy the product. Unfortunately, many times, these excess products are purchased at a value that is lower than what the product is worth. This is why profits decrease when a business has excess inventory.

The Relationship Between Storage Space and Cost

Not only does a company need to find a way to store excess inventory, but they must also find the money to store it correctly. This excess inventory takes away space from other inventory items that could sell at a faster, more productive rate. In addition to taking space away from better-selling items, it also costs the company to move and manage the products. The company must consider the utilities and expenses to do so as well. No business leader wants their employees to waste time moving and organizing excess products when they could be doing other tasks that are more beneficial to the company’s success.

Products Are Wasted

An even greater downfall to having excess inventory is that some products simply go bad. Many products that have expiration dates must be thrown away because they are no good and can no longer be sold for a profit. Companies that sell produce or other food items should never keep excess inventory in storage for too long, as they will likely go bad.

While most companies keep excess inventory as an accident, businesses should do everything in their power to ensure this doesn’t happen. Here at 18 Wheels, make sure that our centers for warehousing and distribution in Vancouver won’t lead to negative situations with excess inventory.

When looking at how excessive inventory affects distribution, you can easily see how negative the practice can be for your business or company. Be proactive and take the necessary steps to avoid such scenarios.

Michael Kotendzhi is President of Operations & Transportation and a partner at 18 Wheels. Michael has over 15 years of experience and is equipped with a degree in Logistics from the University of British Columbia Sauder School of Business. As well as a background in logistics from XPO Logistics (formally Kelron Logistics), North America's largest contract warehousing provider.

Michael's experience includes supply chain management, reverse logistics, & domestic transportation. He has developed 18 Wheels' trucking solutions, effectively utilizing the sister company's vehicle fleet and building a transportation supply-chain network across North America.