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One way to identify problem inventory is to gather it up and put it into full view for all to see every day. Stores gather up the old items that did not sell and they put them piled up on a shelf by themselves marked down 75%. Customers look forward to go to the mark down bin to save money. You want your old inventory that is not moving turned into cash also. At a certain point do not care what it originally cost; you have already wasted too much of your time on it at this point. Try the following actions to try to move dead stock in your firm before you scrap it automatically after so many days.
Actions for obsolete inventory:
- Write the age on all old stock.
- Generate a report at least once per week summarizing everything in the dead zone (all obsolete stock).
- Assign employees to each of the items on the report who are responsible for getting rid, trading or selling the items.
- Sell it at a deep discount and do not look back.
- Rework it and try to use it in normal production.
- Get scrap dealers in to get multiple bids.
- Advertise the stock at a discount (website, handouts, mailers).
- Pay bonuses for selling obsolete stock more quickly than regular commissions. Try paying sales of obsolete inventory within one or two days after the sale versus at the end of the month.
- Establish a specific time when the items finally get scrapped and go to the junk pile. Establish this in your company so you do not continue to waste time trying to move it when there are obviously no buyers in the market.
- Learn from your inventory writeoffs and losses the list of items your firm will not buy again unless guaranteed by an incoming sales order.
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