Holding Excess Inventory: Pros and Cons | PlanetTogether

By far one of the most important aspects pertaining to manufacturing facilities and warehouses across the globe include managing inventory. Depending on what your organization holds or produces, you need to ask yourself some questions. What is my demand? How frequently does it fluctuate? How cost-effective would holding excess inventory be? Would warehousing product increase my revenue in the long-term? These questions are all prevalent and important when deciding on whether or not to hold excess inventory – and ultimately how much you should store and choose to reorder at a given time.

Holding excess inventory is both advantageous and detrimental to an operation, but the options can be weighed when considering what type of products you are warehousing. Within this blog, we are going to discuss the pros and cons associated with holding excess inventory and how it pertains to your operation.

Pros of Holding Excess Inventory

The pros and cons of holding excess inventory include the following:

• Enhanced Response Time – Fulfilling orders is extremely important when attempting to grow your consumer base and increase customer loyalty. Holding excess inventory will allow you to easily and quickly fulfill customer orders as soon as they come in, all without having to worry about waiting on your stock to come in to ship an order out. Holding onto your customers is essential – and this is the step in the right direction.
• Decreased Risk Shortage – Through keeping stock on hand, you can guarantee, up to a certain point, that you will not run out of a particular item and will have less to worry about if a product is discontinued. If there is a shift upward in demand, then you can meet these customer delivery fulfillment times and beat out the competition in this aspect, and will more than likely be able to sell excess inventory at an ideal price 

Cons of Holding Excess Inventory

The cons of holding excess inventory include the following:

• Obsolete Inventory - Obsolete inventory is a common concern among manufacturing facilities and warehouses, especially if your inventory is in the technology sector. The value and quality of your product will decrease the longer that you keep it in stock, in which you have to make it a priority to sell this stock while it is new to the market. Don’t get stuck in building up large amounts of stock for a product that is the new craze or a fad – it could go away in the blink of an eye and you’re stuck with a mountain of inventory.
• Storage Costs Increase­ – Excess inventory will mean that extra space is needed for storage. Extra space will also mean extra costs, which you will have to include in pricing. This can potentially cause you to lose to the competition with other sellers because your holding costs are making your overall price too high. Even if you have your own warehouse, you will still have extra costs associated with maintenance and also risk not having enough space for newer items.

Understanding the advantages and disadvantages pertaining to holding excess inventory can greatly enhance the decision making process through allowing you to decide whether it is an option for you or not. A software that can aid with adequate inventory management is PlanetTogether’s Advanced Planning and Scheduling (APS) Software. Advanced Planning and Scheduling (APS) Software is a must for manufacturing operations that are seeking to enhance operational efficiency and cut costs within their operation as well.

Advanced Planning and Scheduling Software 

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

• Create optimized schedules balancing production efficiency and delivery performance
• Maximize output on bottleneck resources to increase revenue
• Synchronize supply with demand to reduce inventories
• Provide company-wide visibility to capacity
• Enable scenario data-driven decision making

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

Video: Using PlanetTogether APS to Balance Capacity and Inventory Levels

Excess inventory often hides deeper planning issues: unreliable schedules, poor visibility into capacity, and weak alignment between demand and supply. At the same time, cutting inventory too aggressively can lead to shortages and missed deliveries. PlanetTogether APS connects capacity planning, production scheduling, and inventory strategies so you can find the right balance for your products and customers.

In this video, you’ll learn how PlanetTogether APS helps you:

– Visualize resource capacity and workload across plants, lines, and work centers
– Align production plans with forecasted and actual demand to avoid overproducing
– Run what-if scenarios to compare the impact of different inventory and capacity strategies
– Reduce overtime, expediting, and “just-in-case” inventory by planning around real constraints
– Use existing ERP/MRP data to create a single, realistic plan that supports both service level and inventory targets

This video is ideal for operations leaders, inventory managers, and production planners who want to move beyond rule-of-thumb stock levels and use APS to systematically balance capacity, inventory, and customer service.

Key takeaways from this video:

• How PlanetTogether APS links capacity planning and inventory strategy in one schedule
• How visualizing resource load vs. demand helps prevent both excess stock and stockouts
• How what-if scenarios let you test different safety stock and production strategies before committing
• How better planning reduces overtime, expediting, and obsolete inventory
• How integrating APS with ERP/MRP turns operational data into a data-driven capacity and inventory plan

Find the Sweet Spot Between Service Level and Excess Inventory

Holding extra stock helps you respond faster and avoid shortages—but it also ties up cash, increases storage costs, and raises the risk of obsolescence. The real challenge isn’t just deciding whether to hold excess inventory, but where the tipping point is for your products, customers, and network. That’s a planning problem, not just a warehouse problem.

Download our one-page “The Money Is in the Planning” infographic to see how planning and scheduling choices quietly turn into:

• Excess inventory that ties up working capital
• Stockouts and missed deliveries when plans ignore real constraints
• Overtime, expediting, and emergency shipments to compensate for poor planning
• Margins that erode even when sales look healthy

Use it as a quick checklist with your team to identify where Advanced Planning & Scheduling (APS), working alongside your ERP/MRP, can help you cut excess inventory while still protecting response time and customer service.