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One way to identify problem inventory is to move it, gather it up, keep it in full view and make everyone trip over it every day.  Once your stock passes a certain age automatically, drag it out and let everyone see it.  Put the oldest items upfront with dates written on them.  Move these items out of good moving stock and into a well-defined and marked designated zone where the following actions occur.

Make everyone walk past your excess inventory.  Make everyone walk past it, climb over it and mark it to show if the pile is growing or shrinking.  Require the fat boss to have to walk out of his way to navigate around this expensive pile of unsold goods.

Inventory dead zone actions:

1. Show the age on all inventory stock.  Make sure your inventory system shows the age (last date sold) on all reports so you know what you are looking at in the warehouse.  If it is in the Dead Zone, you will not have to ask, “Is this a high volume item or a slow moving item (does this have whiskers)?”
2. Generate updated ‘obsolete’ or ‘aging’ report weekly.  Have a report generated weekly that lists the items that need to be moved to the Inventory Dead Zone and make sure they are moved there.  On the report, indicate the person’s name that is responsible for eliminating the item (i.e. Sell it at discount, rework it, scrap it after all else fails).
3. Get scrap dealers in to get multiple bids.  Invite different scrap dealers to walk through this dead zone and give you an idea what scrap prices are applicable for these items. Do not sign any scrap deals with anyone unless the resolution of this ‘growing pile’ is included in the deal.
4. Call and try to sell the stock at a discount.  Designate someone in sales to contact the respective customers concerning buying these non-moving items at a special ‘move-out’ price.  Possibly put a special ‘bonus’ on moving this type of stock for the sales people.  Give them $25, $50 or $100 but instead of waiting a couple of months to pay out, pay the bonus this coming Friday;  make it special and very lucrative to get this off the shop floor.  Specify this one time opportunity.
5. Setup predetermined time frame when it gets scrapped and out of sight.  Establish company guidelines as to specific dates that inventory will be sold as scrap so it does not accumulate in the plant.  Use a general easy rule to remember (Examples:  Scrap at 180 days old, Scrap parts when engineering revisions change, after three ‘sales’ tries, etc.).  If you do not establish a rule as to how to handle these items, it becomes very difficult for employees to throw company property away in the scrap bin.  If given a choice, they will keep it in stock to be safe.

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