Is excess inventory keeping you up at night?

Posted by KImberly Armstrong on Apr 15, 2013 3:45:00 PM

Executives have a lot to think about when it comes to running a profitable, growing business.  And certainly, every Procurement Director, Brand Manager, VP Marketing, or Buyer touching a brand are faced with 100 reasons to fear inventory issues.  In the absence of a crystal ball, many have spent a few sleepless nights worrying about a plethora of market uncertainties: 

Will the seasons co-operate? Will we need to re-label?  What if the economy tanks again? What about surprise competitive activity?

If I’ve over-forecasted, what to do about the excess inventory? Take the loss and a write-down? Cut back on my marketing plans to make up for it? But without marketing to drive product sales, I'm in a vicious cycle of sliding sales and too much inventory again.

The list goes on.

“The best way to predict the future is to invent it” Alan Kay

Every moment spent stressing about the unknowns and uncertainties of tomorrow, is time away putting that same effort into innovating for the future.  In today’s increasingly competitive landscape, Executives need to spend their time growing their business through creativity and innovation, not moving excess inventory.  The challenge is how to maintain the highest level of flexibility so you  thrive regardless of what the market does.

One way many leading brands are thinking outside of the inventory problem box is with Corporate Trade.  Corporate Trade is a smart solution, used by forward-thinking  businesses as risk mitigation strategy for inventory hangover.  Essentially, it allows you to use excess inventory (or any asset) to pay part of your media budget, and acts as a safety net for any market hiccups. Here’s how:

  • The Corporate Trade company will buy your inventory for up to the full wholesale value. 
  • They will pay you in a Trade Credit, which acts as a credit note.
  • You will use the Trade Credits in combination with cash to purchase your media, which in turn supports the sales of your new products. 
  • Inventory problem solved, marketing budget extended, and write-down recovered.

Sleeping soundly yet? Almost, because I’m sure you have questions.

Q – I love my agency and they do a great job.  Is the Corporate Trade company  buying my media? Do I have to give up my agency of record?

A – No.  Corporate Trade companies love your agency too. Which is why they work collabnoratively with your agency that plans your media.

Q – Okay, but my media planning agency made an incredible plan and we are expecting huge results from it.

A – Perfect! Your AOR is working in your best interest to create plans that are perfect for your brands.  This is why you chose them after a lengthy RFP process.  The Corporate Trade company with your agency, and is briefed by your AOR on the plans.  They compile a proposed schedule and then send it to your agency for feedback and approval.  The Corporate Trade company doesn’t book the schedules until your agency is happy with it.  Once they agree that all the qualitative and quantitative parameters of the buy have been met, THEN the booking is placed.

Q- This is great, but my existing buyers are good clients whom I do not want to overstep. Can I use Corporate Trade and still keep that relationship?

A – Not to worry, the Corporate Trade company will sell it to them if that’s the preference, or can find another buyer that you approve of through our channels.  Either way, you still have final say where your product ends up. 

Ready for that nap now?  While Corporate Trade isn’t going to solve all your life’s problems, it can help you get a bit more sleep.

Nikki Rollins

Director of Strategic Partnerships, Active International


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Topics: Risk Management, Media & Marketing, Corporate Trade 101, Marketing on a Budget, Supply Chain Management (SCM), Inventory Turnover & Closeouts

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