Not all product inventory turns at the same velocity. In the hardwood lumber industry inventory can be impacted by many different factors including export regulations, log availability and fashion just to name a few.
Sometimes bundles of inventory can pile up in a concentration yard and before you know it you have less room to maneuver causing operational delays and manpower problems to deal with. Of course it is best to deal with slow moving inventory issues before they arise. However, when you don’t notice it in time, we have found that there are a few techniques that seem to help on a regular basis:
- Bundle. The practice on product bundling can often times be very effective. Identify a complimentary product which you have an abundance of and pair it with a product that is in high demand and sell them as a package deal. For us it might be something like a combination of 4/4 1 Common White Oak and 8/4 Red Oak Prime. By moving a high demand item with a slower moving that is a needed inventory item for most people you can create a win-win for you and your customer.
- Increase internal awareness. Sometimes items stack up in inventory because they have been forgotten. Perhaps they are hard for your sales force to identify or find. Or maybe they are specialty products that are ordered in smaller quantities or odd lot sizes that are just not the normal reorder package. We have found that if you can have an inventory manager identify the items that need to move and communicate them in a simple way that is ready for sales to offer to customers you will find that more direct offers are made and success is the result.
- Create targeted promotions. Take a hard look at the items you need to move and determine the target market that is most likely to see value in them. This might seem like “marketing 101” but many times a little bit of intentional focus can really prove to be helpful. Consider a targeted direct mail campaign, develop a special program name, send out a small email blast, conduct a social media awareness program and maybe even a limited time pricing promotion to create a sense of urgency and evoke a quick call to action from your customers.
- Repackage. Sometimes looking at your inventory in the form of a raw material can help. In some instances, inventory can be unpackaged, slightly altered and then remarketed as a different product or variant in the same product set which could be more appealing to customers. In our industry an example would be looking at some slow moving random width and length lumber and transform it into specific width sorts, length sorts or even convert it into a SLR2e product that has a higher demand with certain customer segments.
- Incent your team. A tried and true practice that should always be considered is some type of sales force incentive to move the inventory. Slow moving items are more difficult to sell and sometimes put aside by even the best sales teams as they deal with the more pressing customer issues. A quick, simple, impactful incentive to help re-prioritize the importance of moving the inventory can certainly help.
If you have other best practices you can share please let us know!