Surplus Dilemma: Ways to Dispose of Excess Raw Materials

excess materials

Overstocking on Raw Materials

In manufacturing firms, an excess or overstocking of raw materials can be blamed logistical errors or poor planning — ordering or receiving more than what’s needed, or overestimating the number of materials needed in order to produce a certain product. In some cases, it can also be due to the abrupt halt in the production of a certain product, resulting in unused raw materials intended for the product. Another common reason would be because the manufacturer ordered the raw materials in bulk, while well-aware that it’s more than needed, simply because it’s cheaper to do so.

Whichever the case may be, having excess raw materials that can only be used on a specific product can be a bit of a headache, especially if it’s taking up valuable warehouse or production floor space. Luckily, there are many ways your manufacturing firm can dispose of these raw materials and still benefit from doing so.

Return to Supplier for a Refund, Credit, or Another Raw Material

The best-case scenario would be that your supplier would agree on giving a full refund on the excess inventory and even cover the transportation cost (or retrieve the raw materials for free). However, agreeing to refund you partially (or with a reasonable discount), and have you cover the cost of logistics can still be an advantageous scenario, especially if the alternative is having to dispose of the raw materials as trash and having zero returns. You can also try negotiating for store credit, or have the raw material swapped out for a different raw material that you’ll be using for the production of a different product.

Use to Develop New Products

developing products

Another way you can overturn the situation is by developing a new product that can make use of the raw material that you have. You also have the option to use the material to make a modified version of existing products.

Sell through Liquidation Resellers and Similar Platforms

A popular option for manufacturers that have surplus raw and finished materials is by selling them to other manufacturers through resellers. For manufacturers that utilize metal in their production process, there are liquidators and platforms wherein you can either buy or sell surplus raw materials, ranging from slit coil, to shaped wires, metal sheets, to excess finished products such as compression and stamped springs.

Trade-Up

To paraphrase the popular adage, one manufacturer’s surplus could be another company’s treasure. That said, it may be a good idea to contact industry partners and competition, and see if you can negotiate a deal to trade and swap raw materials that you have in excess, for one that you actually need for the production of another product.

Auction

When all else fails, try to auction it off yourself. There are several platforms both offline and online for you to sell your excess raw materials. Although it may take some time and could be a bit tedious, it’s still a viable alternative as compared to just scrapping it. However, if scrapping is the only option left, make sure to look for different scrap dealers and compare their prices to guarantee that you’re selling the excess raw material for as much as you can.

Conclusion

Do take note that these may not be applicable to all manufacturers, and it heavily depends on the type of raw material you have in excess. Regardless, this list simply shows that you can still turn a profit or take advantage of your manufacturing firm’s excess raw materials.