Supply Chain

From Waste to Working Capital:
A Data-Driven Framework for Recovering Value from Surplus FMCG Inventory

Surplus inventory usually loses its value long before anyone calls it waste, and Akash Suluru argues that companies can recover more of it by acting earlier, pricing smarter, and looking beyond their usual sales channels.

By Akash Suluru | Published 1 hour ago | About a 5 minute read

Image: Photo by Peaky_82 on Unsplash

Consumer-goods companies often confront surplus inventory only after much of its value has already disappeared.

A product slows in one market, approaches its best-before date, and eventually enters a familiar sequence: markdowns, liquidation, returns, write-offs or disposal.

But the problem often begins much earlier.

Surplus inventory is rarely just a waste-management issue. It can result from disconnected decisions across forecasting, purchasing, pricing, allocation, distribution and demand generation. By the time those functions recognize the same problem, commercial options may already be limited.

A more useful question is not: "How do we liquidate this inventory?" It is: "Where, at what price, and through which channel does this inventory still have economic value?"

That question informed a framework I developed and tested through MuriMura, a zero-waste FMCG pilot that has since concluded. The objective was to treat surplus and short-dated inventory as a coordinated commercial system rather than an end-of-life disposal problem.

The more important lesson from the pilot was not the marketplace itself, but the operating framework behind it.

1. Identify surplus before it becomes distressed inventory

Most liquidation systems begin when a company already knows it has a problem. A recovery system should begin earlier.

Useful signals can include remaining shelf life, inventory velocity, recent sell-through, geographic demand, batch quantity, category performance and historical demand.

The goal is not to predict waste perfectly. It is to identify inventory whose probability of becoming surplus is rising while the business still has time to intervene. Every additional week of usable commercial life can create more options around buyers, pricing and distribution.

The first principle is simple: intervene while margin still exists.

2. Treat demand as a network, not a single channel

Inventory that performs poorly in one channel may still be valuable elsewhere. A slow-moving SKU in one geography could be attractive to a corporate purchaser, reseller, retailer, bulk buyer, institutional buyer, direct consumer or alternative commerce channel.

This changes the question from "How do we discount this product?" to "Where does this product still have the highest probability of selling?"

The principle can be applied without operating a marketplace. A brand or retailer could use the same logic internally by maintaining a ranked hierarchy of alternative channels for at-risk inventory.

3. Price inventory based on its actual condition

Blanket discounting is convenient, but it ignores the fact that the economic value of surplus inventory changes continuously.

Pricing should consider remaining shelf life, quantity, local demand, category sell-through, alternative-channel demand and minimum acceptable recovery value.

A product with substantial remaining shelf life and strong secondary-channel demand should not necessarily receive the same markdown as inventory approaching the end of its commercial window.

Dynamic pricing therefore becomes less about promotion and more about value recovery. The objective is to maximize expected recovered value before time erodes the available options.

4. Redistribution only works when buyers trust the inventory

A technically optimal price and channel do not guarantee sell-through. Short-dated inventory can suffer from perception problems, particularly when buyers misunderstand the distinction between product quality, safety and date labeling.

Any redistribution strategy therefore needs a trust layer: clear date information, transparency around product condition, appropriate safety information, consistent brand presentation and consumer education.

This communication should be treated as part of the operating system rather than an afterthought, especially for brands concerned about consumer perception or retailer relationships.

5. Measure both commercial recovery and waste avoided

The final step is measurement. A company should be able to answer how much inventory was recovered, what value was preserved, which channels performed best, how much inventory avoided write-off or disposal, and which interventions produced the strongest sell-through.

Each transaction can then become feedback for future purchasing, forecasting, allocation and pricing decisions. The model should operate as a loop rather than as a one-time liquidation process.

What early testing showed

The MuriMura pilot has concluded, but the testing period provided useful evidence that both sides of the system could engage.

Approximately 18 brand partners were onboarded within four weeks, four corporate purchase agreements were secured within about five weeks, a pipeline of more than 100 prospective buyers was developed, and multiple pilot orders were completed across packaged foods, personal care and cosmetics.

The pilot also progressed beyond expressions of interest into real product transactions. Products from participating brands were ordered and fulfilled for buyers across multiple locations, demonstrating that the commercial workflow could function in practice.

Some pilot activity was conducted with commercial partners under confidentiality obligations, so I cannot disclose all partner-specific volumes, pricing or commercial terms. The aggregate figures above are the traction metrics I can share publicly.

The pilot was intended to test whether brands would make inventory available, whether alternative demand could be identified, and whether the workflow could operate commercially. It provided early validation on each front.

At the same time, the pilot was not large enough to support broad claims about percentage margin recovered, total waste diverted or performance relative to traditional liquidation. Those are metrics a larger-scale implementation should measure systematically.

Where the framework can break

The framework is not universally applicable.

Timing is one failure point. If inventory is identified too late, there may not be enough commercial life remaining to find demand and move the product economically.

Logistics can also destroy the business case if transportation and fulfillment costs exceed the remaining inventory value. Channel restrictions may conflict with distributor agreements, retailer relationships or brand positioning. Poor data can undermine forecasting, while alternative-channel discounts can create pricing conflict with full-price partners.

Finally, sustainability measurement must be defensible. Claims about avoided emissions or environmental impact require clear methodology and should not be extrapolated beyond what the underlying data supports.

These limitations are not reasons to abandon the approach. They are reasons to build explicit decision rules into it.

The broader opportunity

The fundamental idea is applicable beyond one marketplace or company.

Any organization holding perishable or time-sensitive inventory can ask four questions earlier: What is likely to become surplus? Where does alternative demand exist? What price maximizes recoverable value? What can we learn from the transaction?

When those questions are treated as part of the same operating system, sustainability and commercial performance no longer need to sit on opposite sides of the organization.

Waste prevention becomes easier to scale when avoiding waste also preserves working capital. That may be the most important shift: treating sustainability not only as a cost or reporting obligation, but as a better way of designing the economics of inventory itself.