What is a strategy to minimize overstock in inventory?

Implementing the 80/20 inventory rule is an effective strategy to minimize overstock in inventory. This rule, also known as the Pareto Principle, suggests that a significant portion of a company’s revenue comes from a small percentage of its products. By focusing on the top 20% of items that generate 80% of the sales, retailers can prioritize inventory management on these high-demand items. This targeted approach helps to reduce excess stock of less popular products, optimize inventory turnover, and ensure that the most profitable items are readily available, ultimately minimizing overstock and associated holding costs.

The other strategies suggested would likely contribute to overstock issues. Ignoring sales trends does not allow for informed decisions about what inventory to keep or reduce. Continuously ordering excess stock can easily lead to overstock situations rather than addressing the root causes. Lastly, tracking only outgoing shipments neglects incoming stock and overall inventory management, which is crucial for preventing overstock situations.