Overstock, excessive stock, excess2sell, B-stock, or excess inventory, is the result of poor management of stock demand or of
material flow
Material flow is the description of the transportation of raw materials, pre-fabricates, parts, components, integrated objects and final products as a flow of entities. The term applies mainly to advanced modeling of supply chain management.
As in ...
in
process management. Excessive stock is also associated with loss of
revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
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 the following ways: returned to the manufacturer or original distributor; liquidated to companies that then resell it on the secondary wholesale or retail market; sold at an extreme discount to existing customers; or sold to salvage companies which then process metals and components of value.
Economic implication
The initial damage caused by excessive stock is an early exhaustion of
cash flow, which leads to the subsequent loss of disposable capital available for investing. If a company has too much overstock inventory on it’s books, it may affect sales to the point where the company has to go out of business. Although this is rare, when overstock inventory is not properly managed and becomes too large a percentage of total inventory, it can result in bankruptcy.
With perishable supplies, excessive stock can cause the loss of millions of currency units as the
product
Product may refer to:
Business
* Product (business), an item that serves as a solution to a specific consumer problem.
* Product (project management), a deliverable or set of deliverables that contribute to a business solution
Mathematics
* Produ ...
's freshness may deteriorate to such an extent that it cannot be sold, as is the case with dairy products, fresh baked goods, flowers, produce, fish, and meat. It is also true of consumables such as oil, gasoline, paints, and medications. Time-sensitive items such as periodical literature are similarly at risk.
See also
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Inventory
*
Inventory control system
Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock". It is the process of ensuring that the right amount of supply is available within a business. However, a more focused definition takes into acco ...
*
Inventory management software
Inventory management software is a software system for tracking inventory 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. Com ...
*
Military surplus
Military surplus are goods, usually matériel, that are sold or otherwise disposed of when held in excess or are no longer needed by the military. Entrepreneurs often buy these goods and resell them at surplus stores. Usually the goods sold by t ...
*
Operations management
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Supply chain management
*
Warehouse management system
References
External links
* http://www.iamwire.com/2017/07/excess2sell-b2b-excess-inventory-liquidation-platform/155506
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* {{cite web , url=http://ncnonline.net/news-in-brief/checkers-india-unveils-indias-first-excess-inventory-marketplace-www-excess2sell-com.html , title=Checkers India unveils India's First Excess Inventory Marketplace – www.excess2sell.com {{! NCNONLINE , website=ncnonline.net , url-status=dead , archive-url=https://web.archive.org/web/20170422160147/http://ncnonline.net/news-in-brief/checkers-india-unveils-indias-first-excess-inventory-marketplace-www-excess2sell-com.html , archive-date=2017-04-22
Inventory