Inventory challenges have been in the news recently, and people have felt the impact of shortages and price fluctuations worldwide. Businesses will need to find creative ways to tackle these shortages — as well as slow-moving and excess inventory — as supply chains continue to be global, interconnected, and intricate. Innovative and sustainable approaches are especially needed to navigate inventory issues effectively.
This article will explore how excess inventory harms the environment — and what brands can do to address it.
What Causes Slow-Moving and Excess Inventory?
In a rapidly shifting market, it can be difficult to accurately forecast customer demand. Seasonal trends come and go, and it’s hard for businesses to know exactly when one trendy item will fall out of favor and be replaced by a new one. In other instances, market volatility can force brands to unexpectedly adapt to supply chain disruptions. This results in some inventory being overstocked and other products being delayed. Weather changes can also contribute to poor forecasting.
Just as importantly, businesses often don’t make use of all the data available to them when making predictions. In the age of big data, most businesses should have the capacity to forecast accurately based on both historical and real-time data. Unfortunately, many companies still rely on outdated legacy systems to track inventory. This can include old-fashioned emails and spreadsheets, leading to slow processes inevitably affected by human error.
Fortunately, cutting-edge tools can drive a smoother, less wasteful supply chain by tracking inventory more effectively and creating data-driven insights to predict demand.
What Are the Environmental Effects of Slow-Moving and Excess Inventory?
Excess inventory often turns into waste, which can wreak havoc on the environment. Waste can damage ecosystems in a few different ways.
Landfill and Ocean Waste
All too often, companies send their excess inventory straight to a landfill. Fast fashion is well-known example of this. When on-trend outfits are suddenly out of style, brands face challenges with using valuable resources to move or store them. Instead, businesses more commonly dispose of them. In fact, in the fashion industry alone, as much as 85% of excess inventory ends up either dumped in landfills or burned.
Once it’s dumped, garbage often makes its way to the ocean, where it causes problems for the marine ecosystem. For example, marine animals become sick after eating plastic waste, sometimes dying of starvation because their digestive systems are full of plastic. Heavy metals like lead and mercury from electronics can also leach into landfills and oceans, poisoning animals. In some cases, heavy metals can even contaminate human drinking water or food sources.
Unnecessary Destruction of Goods
When businesses don’t dump their products in landfills, they may sometimes instead be forced to destroy the excess goods. As a common example, this happens when perishable food goods pass their expiration date. At this point, brands destroy goods since they can no longer sell or donate.
In other cases, companies may destroy excess goods simply to maintain their brand exclusivity. A few years ago, for example, Burberry reportedly burned millions of dollars worth of bags and apparel to keep its brand from being diluted.
Unfortunately, businesses often destroy their inventory in dangerous ways, such as by burning it, before the goods ever reach consumers. This releases harmful carbon dioxide and other greenhouse gasses into the environment, which has long-term impacts on human health and climate change.
Emissions From Transportation
Even when brands don’t dump or destroy their goods, their supply chain issues may still be causing environmental damage.
Inefficient transportation of excess goods leads to excessive emissions from trucks, ships, rail, and planes. For example, brands and retailers still struggle with maximizing the capacity of trucks when transporting excess goods. They may send out their trucks half full or fail to plan for the trucks’ return trips. The lack of transportation optimization can lead to greater fuel use and more harmful greenhouse gas emissions.
Just as brands can use data to improve their inventory management by predicting customer demand and more effectively managing and selling excess goods, they can also utilize data to improve their truckload management, transportation and logistics.
How Brands Can Get Ahead of Excess Inventory Challenges
Digital Transformation is key. Many brands often take a reactive approach to addressing this subset of inventory—leaving it as the last item on their to-do lists. When leveraged properly, AI solutions can provide greater inventory visibility to predict inventory at risk of becoming slow-moving or obsolete, enabling sales teams to make more proactive decisions. In addition to enabling predictive capabilities, investing in technology solutions can also help sales teams strategically sell their excess inventory. Many brands have little to no historical data to help improve their go-to-market strategies, and as a result they’re not effectively moving enough inventory into other channels. The right technology solution can centralize this data and provide actionable insights, empowering teams to understand how much inventory should be moved, at what price, and when.
In addition to data, brands can look to technology to help them create a more predictable sales cycle with the use of automation. Manual tasks revolving around spreadsheets, emails, and outdated legacy systems slow down sales teams and create the risk of human error, and the most successful brands have implemented as much automation as possible to ensure their go-to-market process is standardized and predictable. Developing a standardized process can help accelerate the speed at which you curate product assortments for buyers and negotiate, helping achieve higher sell-through rates and less inventory at risk of being discarded or destroyed.
Working With INTURN 360 to Get Ahead of Excess Inventory
Some of the biggest global brands trust INTURN 360 to identify, manage, and sell slow-moving and excess inventory. With our solution, brands can maximize recovery and lower operating costs, as well as help the environment by preventing unnecessary waste and destruction. Reach out to learn how you can get started.