Managing inventory turnover

Managing inventory turnover in a declining market requires deliberate and disciplined actions. Here are a few ideas -- both offensive and defensive -- around which you should be able to develop a strategy that's best for your business and circumstances. Your best plan may actually combine both offense and defense.

Defense
- Estimate the rate of decline and forecast inventory replenishment accordingly
- Reduce safety stocks in line with revised forecasts
- Sell your inventory and product line to a competitor
- Discount products when feasible to increase the rate of sales
- Write-off, write-down and dispose of inactive and obsolete inventories

Offense
- Develop and use alternative sales outlets (e.g. Internet auctions and sales)
- Buy competitors or their product lines to consolidate market demand to your inventories
- Increase prices to capture more margin on lower sales volume
- Arrange for more inventory to be held by suppliers at their cost