Dealt with dead inventory through ERP and correct repair techniques

Trigger

When I joined the business, I found out that there was no mechanism in place for inventory management. After doing a detailed study of the inventory for months, I spotted a major issue related to the dead stock which had not been addressed in the past. Inventory dating back to years had piled up without anyone’s knowledge and significant amount of funds were trapped in those products. We identified the problem and realized that it needed to be dealt with urgently.

Implementation

We had installed an ERP system in the showroom in 2019, which helped identify the old stocks. Thereafter, we came up with the idea to put colour tags on the old inventories, so that it is visible to everyone in the showroom. Different colour tags were put on the inventory based on their year of creation. A yellow-coloured tag was used for inventories older than 5-6 months, and a red tag for those inventories older than 300 days. After completion of the tagging process, different attractive schemes and offers were announced depending on the type and category of the products.

We used to run special offers during the wedding season, such as 30%-50% off on the making charges or other offers, to clear the stock in a phased manner. So, it was not just discounts which were applied to the dead stock. I personally investigated why the articles were not selling. For example, there were a few articles which had minor defects in them such as small bends or missing stones. This happened because managing a lot of inventory leaves you with no option but to overlook smaller details. So, we repaired those items and presented those as fresh inventory. Articles which grew dull in colour over time for longer display and handling were re-polished and got sold instantly.  The salespeople were being trained to inform the customers about our attractive offers and discounts as well.

Result

We got a very good response from discount-oriented customers. Due to this, we have been able to reduce our dead stock by about 40%. The system immensely helped us during Covid, as we did not want to purchase new jewellery due to the cash flow challenges. So, I think we could manage our inventory more efficiently due to correct use of ERP.