The trick behind turning slow-moving inventory into profit
Sometimes keeping aircraft parts in stock to fulfill contractual obligations or seek opportunities once they arise, makes a valid business case for companies to pursue. However, if not done correctly the strategy can put unnecessary strain on cash flow and resources. Jevgenijus Petronis, Head of Product at Locatory.com, a leading online aircraft parts marketplace, provides some possible solutions on how to tackle this problem.
Manage parts differently
Different part numbers require different storage conditions. Just like milk has to be kept in the refrigerator not to spoil quickly, aircraft parts are subject to specific storage conditions. Not all items are consumed in the same amount of time, thus C category items cannot be held and handled like A items.
“For example, safety stock is a great planning strategy for fast-moving A category items, while the same cannot be said about B or C parts. For them, safety time is a better planning alternative to be used. When this strategy is used the average inventory is one-half the replenishment quantity plus the remaining existing inventory on-hand when the replenishment is delivered. By doing this, the organisations can keep much less safety stock and avoid the risk of scrapping the items due to excess inventory,” – comments Jevgenijus Petronis.
Sell off excess inventory
If by any chance the company has accumulated a large surplus of slow-moving inventory, there are several possible solutions to sell off the excess quickly.
Target the customer who may be ready to buy – develop a forward-looking model, where the contact list is based on historical orders, requests, equipment installed at their facilities, and possible future projects. This tactic is efficient and highly successful since, if researched correctly, it allows companies to stay one step ahead and move their stock effectively and quickly.
Explore online aircraft parts marketplaces – this practice is often called pooling, as the company provides access for interested parties to see the location, price, and quantity of a particular number. One of the most effective ways to enter large pools of such information is through dedicated online aircraft marketplaces.
“With more than 3500 buyers and sellers on the platform and 12.1 billion parts listed, it is easy to connect with possible clients and off-load stock quickly and effectively. With the added benefit of secure shipping services provided by our partners, the pooling and the final purchase process becomes easy, straightforward, and most importantly efficient and quick,” – added the Locatory.com representative.
By effectively managing and controlling the size of an inventory, it is possible to rectify the issue and turn slow-moving parts into a strong business model, and ultimately into profit. Whether it means a new planning strategy or new ways to connect with buyers and sellers, smarter stock management is an indication of a strong and versatile aircraft parts business.