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Monday, March 27, 2006

What is Stock Balancing?

Stock Balancing defined Stock Balancing occurs when a customer returns stocked inventory to the vendor or distributor from which they originally purchased it. The term is a derivative of the idea that the purchaser has too much inventory and needs to rebalance their inventory levels by decreasing inventory of some items and increasing inventory levels of other items. A typical scenario for stock balancing occurs during a new product launch or a yearly reset. A retailer might reset their product lines at the end of March. The retailer will work to sell as much of existing inventories or return anything that cannot be sold by the end of March. Simultaneously, they will work to bring in new models of these products to stock the shelves and distribution pipeline. A stock balancing request may also come from a retailer when they find themselves holding too much inventory that can not be sold within a reasonable amount of time (from the retailers perspective.) If they happened to purchase a product with a slow sell through rate, otherwise known as a dog of a product, they might request a return of all or mostly all of the remaining units. They will then bring in a new product from the same vendor or possibly go to a competitor and replace the product or line with one that turns inventory more rapidly. In future articles, we will discuss the finer points of stock balancing, along with the benefits and pitfalls to avoid. For further information on this topic, you may refer to Softduit Partners if your interested in a direct consultation. We thank you for reading this article and encourage you to subscribe. (all subscriptions are free.)