The global pandemic has thrown every business into unmarked territory. From start-ups to well-established organizations, almost everyone has had to at least adapt, if not blaze a completely new trail.
If times are feeling particularly lean, remember that product inventory ties up cash—and access to cash during tougher bouts could mean the difference between making it through an economic downturn and going down with it.
See the Forest Through the Trees
Tap into your survivalist instincts to get through these times.You’ll need to take a holistic look at your inventory catalogue in order to drill down to what really matters. And, if your business is feeling cash-strapped, the good news is that there are proactive measures any product-based company can take to intelligently manage inventory in order to free up cashflow when you need it most.
Furthermore, a proactive approach never hurts. Even if your business isn’t feeling the squeeze, you never know if an unforeseen lion, tiger or bear may change up the landscape. Working with a supply chain management expert can help ensure you’re always on your toes.
Three Ways to Unlock the Cash within the Back Country of your Inventory Stores:
1. SKU Rationalization: There exists an inverse relationship between the number of SKUs you have and supply chain efficiency. More SKUs make response times and inventory management capabilities less nimble, and your supply chain less resilient to disruption, all while reducing overall liquidity.
A recent industry article cited that consumer product giants like Mondelez, Procter & Gamble and Cocoa-Cola, all world-renowned for their immense supply chains, have each made moves to reduce the complexity of their supply chains due to the stress factors triggered by the Coronavirus pandemic—namely, they have all cut back the number of SKUs in their product lineups to improve efficiencies.
While it may sound counter intuitive to give customers less choice, doing so could actually deliver huge benefits. Not only can you focus on what’s selling and profitable, and rationalize out whatever is weighing you down, but you may help combat the paradox of choice phenomenon—where consumers simply walk away from a potential conversion if they feel overwhelmed in the decision-making process.
Aim for simplification. SKU rationalization leads to better inventory management and planning, generally improves purchase power and pricing, focuses and accelerates supply chains, and releases cash that had been assigned to lower-performing products.