Inventory Impossible

With LEDs evolving so fast, keeping inventory up-to-date can be a challenge. Two branch managers offer insights on how they handle this moving target.

With new generations of LEDs seemingly being introduced in the blink of an eye – often while previous generations of the product are still being sold to customers – outdated lighting products can be a challenge for distributors.

“With technology changing so rapidly, it’s very easy to accumulate outdated products,” confirmed Rhonda Messing, branch manager at Medler Electric Co. in Bad Axe, MI. “These outdated items can tie up assets and take up space in the warehouse. In addition, the longer they’re in the warehouse and the more they have to be moved, the more likely they are to become accidentally damaged,” she said of the problems such inventory can pose.

According to Messing, outdated inventory isn’t unique to any one type of LED in particular. “The constant drive for increased efficiencies requires manufacturers to keep updating and changing model numbers,” she said. As a result, “every LED item, lamps and fixtures included, becomes outdated very quickly.”

Mac Doyle, Ladson and Charleston, SC-based area branch manager at Border States Electric, agreed. “All manufacturers are constantly working to produce the latest and greatest product offerings and by the time most LED products hit the shelves, they’re quickly on their way to becoming outdated,” he said.

Both Medler Electric and Border States employ a host of tactics when it comes to unloading outdated inventory.  When left with discontinued items at Medler Electric, for example, “we’ll offer sale pricing until it’s gone,” said Messing, though the firm prefers to focus on offensive measures instead. “We try to prevent outdated inventory as much as possible by reducing our inventory on some select items, particularly if the manufacturer(s) can ship quickly,” she explained. “Also, some manufacturers will work with us and allow us to exchange old inventory for new, often with a $2:$1 replacement order.” Overall, she said, “we try to stay up-to-date with current offerings, matching our stock with our market’s demand. We don’t stock the latest and greatest with every bell and whistle, but we stock the items in demand and offer the latest and greatest, with all the bells and whistles, when we see an opportunity.”

At Border States, “when new products hit the market, at times we’ll sell the older version of the product at a discounted rate and will offer incentives to our sales team to move dated inventory to make room for new-generation products,” Doyle said. “I approach new lighting inventory the same way I approach new restaurants — I’m usually excited to check them out, but I also give them time to ensure that everything is working properly. Making adjustments/changes to inventory isn’t always an easy process, so we like to make sure that the items we’re adding are a good fit for our business,” he said, noting that his firm also selectively opts to skip certain generations of products due to the fast pace of the market.

An Ounce of Prevention

Messing advises distributors to prevent outdated inventory from stacking up in the first place by educating themselves on the next-generation products being developed and when they’re coming. “Keep a watchful eye on your current inventory and don’t order more when you know there’s a new model available,” she suggested. “If you do end up with outdated items, get rid of them quickly before they become ‘prehistoric’; you’ll have a better chance of selling an item that was hot three months ago than if it was hot three years ago.”

Doyle agreed, adding that honesty is always the best policy. “Consistently have open communication with your vendor partners and customers,” he said of both new and outdated products. “They’ll usually guide you in the best direction possible.”