Excess inventory
Encyclopedia
Overstock, Excessive stock, or excess inventory, is the result of poor management
of stock demand or of material flow
in process management
. Excessive stock is also associated with loss of revenue
owing to additional capital
bound with the purchase or simply storage space taken. Excessive stock can result from over delivery from a supplier
or from poor ordering and management of stock by a buyer for the stock
When referring to Overstock merchandise in the form of consumer goods in a retail operation, the term refers to goods that have never been purchased by a customer but that are considered excessive stock from shelves and/or warehouses. Excessive stock is typically discarded of in two ways: returned to the manufacturer or original distributor, or liquidated to companies that then resell it on the secondary wholesale or retail market.
, later the loss of free disponible capital for investing.
With food supplies, excessive stock can cause the loss of millions of currency units as the product
freshness may deteriorate to such an extent that it can not be sold, as is the case with fresh fruit and vegetables or even more sensitive resources
like fresh fish.
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
of stock demand or of material flow
Material flow
Material flow is the description of the transportation of raw materials, pre-fabricates, parts, components, integrated objects and finally products as a flow of entities. The term applies mainly to advanced modeling of Supply chain management...
in process management
Process management
Process management is the ensemble of activities of planning and monitoring the performance of a process. The term usually refers to the management of business processes and manufacturing processes...
. Excessive stock is also associated with loss of revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
owing to additional capital
Financial capital
Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....
bound with the purchase or simply storage space taken. Excessive stock can result from over delivery from a supplier
Vendor (supply chain)
A vendor, or a supplier, is a supply chain management term meaning anyone who provides goods or services to a company. A vendor often manufactures inventoriable items, and sells those items to a customer.- History :...
or from poor ordering and management of stock by a buyer for the stock
When referring to Overstock merchandise in the form of consumer goods in a retail operation, the term refers to goods that have never been purchased by a customer but that are considered excessive stock from shelves and/or warehouses. Excessive stock is typically discarded of in two ways: returned to the manufacturer or original distributor, or liquidated to companies that then resell it on the secondary wholesale or retail market.
Economical implication
The prior damage caused by excessive stock is an early exhaust of cash flowCash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...
, later the loss of free disponible capital for investing.
With food supplies, excessive stock can cause the loss of millions of currency units as the product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
freshness may deteriorate to such an extent that it can not be sold, as is the case with fresh fruit and vegetables or even more sensitive resources
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
like fresh fish.
See also
- InventoryInventoryInventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
- Inventory control systemInventory control systemAn inventory control system is a process for managing and locating objects or materials. In common usage, the term may also refer to just the software components......
- Inventory management softwareInventory management softwareInventory management software is a computer-based system for tracking product levels, orders, sales and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other production-related documents. Companies use inventory management software to...
- Military surplusMilitary surplusMilitary surplus are goods, usually matériel, that are sold or otherwise disposed of when no longer needed by the military. Entrepreneurs often buy these goods and resell them at surplus stores. Military surplus rarely includes weapons or munitions, though they are occasionally found in such stores...
- Operations managementOperations managementOperations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as little resources as needed, and...
- Supply chain managementSupply chain managementSupply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
- Warehouse management systemWarehouse management systemA warehouse management system, or WMS, is a key part of the supply chain and primarily aims to control the movement and storage of materials within a warehouse and process the associated transactions, including shipping, receiving, putaway and picking...