Research highlights overstocking

THE CASH Flow and Overstock report, by inventory management software provider Unleashed, analysed 381,000 products, ingredients and components stocked by over 1,800 firms across the UK, North America, Australia & New Zealand. 

The £102,000 figure from the report represents an average ‘overstock position’ for all UK manufacturers – the difference in value between optimum stock levels for each product, versus the actual value of stock held.

Unleashed head of product Jarrod Adam, said: “This is the cost of caution: a value in pounds that shows where firms are, against where they could be – while still doing business at the same levels.” 

Circle One is UK surf brand and Unleashed customer. 

Its business director, James Trevelyan, said: “In terms of the overstocks, by the end of last year we were probably four times over what we'd expect our inventory to be at that point. 

“This time around we were forced to order early. The factories in China were saying five or six months before, you need to order now, otherwise you're not gonna get your slot. Now usually we'd have all the data on the table. I would get quite granular and then add on a bit more to the forecast of uplifting sales etc. It's not really an agile lead time. You can't go back and change this quantity so we had to draw a line in the sand in September.

“It does mean we are not getting twitchy about a late shipment or that we are going to miss the pre Easter period.  We don't have that worry, but a lot of our cash is tied up in that stock. However, we were fortunate in that Covid dealt our sector a good hand and that enabled us to boost our cash reserves, and use that cash to invest in more stock.”

Ultimately, Unleashed’s Jarrod Adam believes the findings will make a real difference for product businesses pressured by inflation and supply chain shocks. Everyone who needs to hold inventory has had a tough few years, he says – and most of it has been out of their hands.

“It's all about finding ways to control what you can,” says Adam. “That can mean anything from improving internal efficiencies, to using a more granular, data-based approach to rebuying.” 

For more information, visit www.unleashedsoftware.com