Coca-Cola is one of the performing companies globally due to its massive investment and excellent marketing and advertisement techniques. Despite the success in business, the company experience different challenges affecting effective operation. One of the company's problems is excess and obsolete inventory, which can be hard to eliminate and increase the general cost of carrying out an inventory. Obsolete inventory means stock or items that have reached the end of its production cycle and longer have market demand because of no sales after a set amount of time (Verma, 2015). Managing and preventing the problem of obsolete inventory in a company is critical for the success of the business.
The longer the obsolete inventory sits in the warehouse, the more it will hurt the business. Obsolete inventory write-off is one of the ways that a company can reduce excess stock. The firm can change excess inventory to the cost of goods sold at the end of the year in the process of taking the loss and moving forward with business. Remarketing the items is another possible solution to getting rid of excess inventory. The company can freshen and reposition displays or sell the items through social media. Using omnichannel e-commerce can be another way of disposing of the obsolete inventory in the company.
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Selling at a discount is another possible way of getting rid of excess inventory. Lowering these goods' price can be painful, but the rising cost of inventory can be much worse. Preventing obsolete from occurring in the first place is vital, and the company can achieve that by forecasting demand to ensure that the supply meets the demand in the market. Tracking inventory levels in real-time is another way of preventing excess inventory (Torkul et al., 2016). Tracking inventory enables the company to know the amount of inventory all the time and allows appropriate actions to be taken when the stick is low or high. Addressing the problem of obsolete inventory is essential for the success of the business.
References
Torkul, O., Yılmaz, R., Selvi, İ. H., & Cesur, M. R. (2016). A real-time inventory model to manage variance of demand for decreasing inventory holding cost. Computers & Industrial Engineering, 102 , 435-439.
Verma, M. (2015). Inventory management accounting for obsolete inventory. Journal of Accounting Research & Audit Practices, 14(1) , 55.
