October 15, 2019
Stop SLOB from weighing down your business
Published in Retail World October issue 2019
A SLOB management solution can free up internal resources and, at the same time, increase return to the business.
One of the biggest challenges for businesses today is slow-moving, unwanted stock. Stock that has had a change to its packaging, been delisted or even a cancelled order. For many and varied reasons your business can find itself with inventory that can weigh you down by clogging up your warehouse, get in the way of first line stock sales and in general “cost” more than you’d like to address what is better known as slow moving obsolete stock (SLOB).
Increasingly, business operators need to find ways to free up their inventory management from the dead weight of excess stock. By partnering with Active, a customised solutions advisor, businesses can increase return on SLOB inventory as well as offset costs and maximise efficiencies in their stock management system - all by tapping into our extensive sales channels (both domestic and global) and bespoke financial solutions.
Turning SLOB into cashflow is possible.
One of our clients is the fifth largest food and beverage company in the world with sales exceeding $26bn (2017). They have a raft of well-known and trusted household brands, 8 of which are $1bn plus, tucked under its wings. Although their in-house surplus inventory management process was working satisfactorily, they decided to explore ideas around focussing on efficiencies and reducing overall write-downs to the business. By partnering with Active, the company was able to achieve these objectives and ace their business challenges by deploying a specially designed, financial model of SLOB inventory management.
Our team was able to create a tailored solution to not only reduce financial losses from excess or unwanted stock and reduce waste, but also increase sales and maximise inventory that had fallen into this category. By working together to design a model that addressed business needs and limitations, we were able to create a smart and effective stock management system for this major FMCG client.
Having designed such customised solution, we were able to achieve an immediate financial return through Trade Credit as well as realise an organic growth through introducing new and untapped sales channels as well as increased clearance price points.
The food and beverage company was able to move more of the inventory each month than what was previously being achieved through their own in-house stock management system.
Before partnering with Active, our client was managing over $1 million worth of SLOB each year and had a limited reach to potential new customers to reduce the amount of inventory they were unable to move. Active got onboard, working with the client to increase the annual SLOB return to nearly $2.5 million. In addition, the agreed Trade Credit increased the realised return in the first 12 months of the partnership to nearly $2.8 million.
The Trade Credit was returned as cash to the business utilising existing media relationships and spend. We secured media activity for our client across all advertising mediums, including Out-of-Home, print magazines and broadcast television stations. We also work with over 11 categories of non-media partners across print, freight, travel, data acquisition, merchandising, and warehousing. The financial strategies we offer to solve business challenges are tailored for the individual client and business requirements.
The bottom line?
Our client was able to get more from their obsolete stock in quantifiable ways by making better use of their sales people and through introduced new sales channels, ultimately, moving more stock than they would have ever thought possible.
Through our partnership, the food and beverage company more than doubled their previous years’ annual SLOB sales. That meant an additional $1.5 million in cash was returned to the business in the first 12 months of our partnership. That’s not even considering the additional ongoing benefit of an improved, more efficient stock management system.
While more and more companies are finding themselves struggling with business challenges, delayed deliveries or unavailable stock, and the effect this has on orders and buyers, our client was able to free themselves of this worry entirely. So, it might be worth thinking: what are the possibilities for your business?
As a financial solutions provider, Active helps businesses mitigate unwanted factors such as slow-moving stock, which allows for businesses to grow and make the most of every opportunity. No matter what the challenge is, Active will tailor a solution to maximise the return to any business across any category.
See how you can increase the return on your business model, maximise monthly orders, and add new sales channels, while exploring money-saving Trade Credit solutions. Turn the SLOB into a profit-making asset and stop it from weighing down your business.