Supply Chain Startup: What to do with all that excess inventory

Back in April, I saw a report that shipments from China were back to pre-COVID levels. I thought that was a positive sign that the global economy was beginning to move again. Then I talked to a friend who is president of a company that manufacturers stuffed animals. Without question, he was getting several containers of product a week from his Chinese manufacturers, product he couldn’t get in February and March. Problem was, now U.S.-based retail customers that were clamoring for inventory when he couldn’t shipments were shut down and cancelling orders. He had no idea what he was going to do with all that excess inventory.

Answering that question is at the heart of INTURN, a startup at the intersection of digital supply chain, sustainability and inventory management that helps enterprises, or brand manufacturers like my friend, buy and sell excess inventory. The solution allows organizations to identify slow moving inventory that’s just taking up space, determine the most efficient and profitable way to sell that inventory and centralize brand data.

Founded seven years ago with a focus on the apparel space, INTURN is the brainchild of Ronen Lazar, the company’s CEO and co-founder. Lazar describes himself “as a serial entrepreneur who is passionate about the influence of technology on retail.” Prior to INTURN, he notes that he “cofounded startups to innovate in the non-profit, entertainment and advertising industries.” To date, INTURN has raised over $50 million from the B Capital Group, Lerer Hippeau, Forerunner, beanstalk and Novel TMT, including $22.5 million in 2017 in a Series B round. It counts Under Armour, Unilever, Levis, Hanes and Kind among its customer base and in September was named an SAP Endorsed App.

From the start, Lazar says he was focused on the enterprise space. “A lot of startups have been in consumer-focused areas, especially in e-commerce,” he says. “But there is a tremendous need for innovation in the backoffice functions.” With COVID, that need has definitely grown, especially as companies like that of my friend have found a mis-match between supply – the inventory they have on hand – and the demand for those products. The challenge, Lazar adds, “is understanding the workings of the back office.”

When he looked at excess inventory, he found a potential $170 billion market in consumer categories and an exponentially larger market across all categories. “Disposing of excess inventory is something that happens on a regular basis; it’s time consuming and expensive; and there’s money left on the table,” he says. The traditional way to deal with the problem was to pull data from an ERP system in an Excel file that might run to 300 pages; cull through all that data to pull out the items that a brand wanted to sell and then negotiate the buyer. The INTURN solution automatically pulls the data from an ERP and other systems of record, then normalizes the inventory in real-time, allows brands to allocate goods into subsections and to offer them to buyers in private meetings. Buyers have access to a similar set of tools.

Lazar argues that the tool delivers value in several areas:

• It reduces the cost of carrying inventory and frees up warehouse space;
• Brands gain visibility into the true value of their goods;
• Margins increase, including double digit margin improvement in some prices, due largely to more timely sales;
• Better market intelligence: “If you’re selling things in a showroom or on the phone, it’s hard to capture all of that data,” Lazar says. “We become the system of record for the process workflow.”

I asked Lazar what lessons he’s learned since going to the market. “The big one is that we are part of an ecosystem that hasn’t seen innovation in the past, and no one had addressed this segment of the market before,” he says. “So, this was new. The mindset around excess inventory was either ‘we don’t have any,’ or ‘we already have a system in place.’ The reality is that we’d go in and see that the system was a bunch of files and Excel. The big learning is that there has been a change of mindset, sometimes because of a change in people.”

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at [email protected]. Remember that the purpose is not to promote any one firm – and a blog shouldn’t be interpreted as an endorsement of a firm or its technology. Rather it’s to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow’s supply chains.