The pandemic has disrupted global supply chains, and this has made it difficult for businesses in the UK clothing, footwear, and accessories manufacturing sector to predict demand. As a result, these businesses are now facing a new crisis of overstocking, with an average of £86,000 worth of goods in excess inventory, according to a recent report from inventory management software provider Unleashed.

The Unleashed report highlights the serious cash flow impacts of the overstocking crisis. Last year's supply chain shocks forced firms to stockpile, but now the challenge for many is freeing up cash flow as economic conditions tighten. The good news is that the money is there, when you look closely at the numbers.

However, experts warn that freeing up excess inventory may not be easy. Businesses with quicker stock turnover will benefit from minor changes to their purchasing cycle, such as only ordering a month or two ahead, giving themselves a bit of a breather to get their stock at the right limits rather than overstocking. On the other hand, those on a longer cycle must accept margin hits as it is important to get cash back into the business and free up warehouse space.

Aside from the challenges highlighted in the Unleashed report, excess inventory can also lead to a loss of market share, as businesses may be unable to react quickly to changing trends or customer preferences. It can also result in product obsolescence, as goods become outdated or no longer in demand, and may require markdowns or even disposal.