Overstock
Quick answer
Stock above the level demand requires, locking capital, taking space and risking becoming dead stock.
Key takeaways
- Orders too large (MOQ, poorly calculated volume discounts)
- Optimistic forecasting
- Lack of visibility on stock across multiple locations
What overstock is
Overstock means holding more stock than real demand justifies. It differs from dead stock (which no longer sells at all): overstock will sell, but too slowly for the investment.
Why it matters to the board
Overstock is working capital locked for nothing, with holding costs, expiry/depreciation risk and opportunity cost. It is the mirror of stockouts - just as costly.
Causes
- Orders too large (MOQ, poorly calculated volume discounts)
- Optimistic forecasting
- Lack of visibility on stock across multiple locations
How CRMconnect helps
CRMconnect highlights low-turnover SKUs with excessive coverage (days of supply), consolidates stock across locations and adjusts order proposals to prevent overstocking.
Real-world example
A retailer had €280,000 locked in overstock on slow-moving items. Coverage reports in CRMconnect identified the SKUs, and stopping their replenishment freed the capital in 4 months.
Last updated:
Frequently asked
Difference between overstock and dead stock?+
Overstock sells, but too slowly; dead stock effectively no longer sells. Untreated overstock becomes dead stock.
How do I prevent overstock?+
Through order quantities based on EOQ + forecast rather than big discounts, and consolidated stock visibility across locations.
Where CRMconnect fits
Related terms
Dead stock
Goods unsold for a long period that lock capital and space, with little prospect of selling at normal price.
LogisticsInventory turnover
How many times stock is fully sold and replenished in a period - a measure of capital efficiency.
FinanceWorking capital
The difference between current assets and current liabilities - the cash a company has to fund daily operations. A key financial-health indicator.
OperationsEconomic Order Quantity (EOQ)
The optimal order quantity that minimises the combined total of ordering and holding costs.