How to Reduce Dead Inventory in Your Factory
Inventory becomes dead when it is pulled from store shelves because it is unsalable or has become outdated. While there are several secondary markets and stores that take dead inventory and help recoup your business’s loss through resale, dead inventory that is not addressed can start to cost your company money very quickly.
What Is Dead Stock?
Dead stock is inventory that has sat on store shelves so long that it has become unsalable. This phenomenon is common for seasonal merchandise such as decorations. Dead inventory also occurs when products have sat on a store shelf for so long that they are obviously outdated, which happens very quickly to merchandise like technology. While this dead inventory may not initially seem harmful, it takes up space you could be using to sell new merchandise.
How to Calculate Dead Inventory
It may be difficult to cope with having dead inventory on hand, but calculating the amount you’re holding and how it can be moved is a necessary first step. If you are using an inventory tracker, check to see how much of a product has moved in the past quarter. If the inventory tracker shows that little to none of a product has sold, declare it as dead inventory and remove it from your shelves.
From there, you can consider bundling or further discounting the inventory to recoup your losses or donating the merchandise and getting a tax write-off.
How to Prevent Dead Inventory
Through modern software and customer surveying, there are a few resources that can help prevent dead inventory:
Product Management Software
With product management software, you can use dead stock analysis to track the amount of inventory being bought and sold and anticipate which products will move. If product management software shows that a product is seeing minimal sales, you should always move fast. Try discounting the item, or if there’s little to no interest, consider returning it to your supplier. The sooner slow-moving merchandise departs your valuable shelf space, the better.
Stock Variations Sparingly
It can be tempting to carry every variation of a product to make sure your customers can always find what they’re looking for. Though this may seem like a smart idea, uncommon sizes and variations can take up more space on the shelf than they’re worth. Using your product management software, look for item sizes and styles that aren’t selling, and try to reduce future orders.
Perform Customer Research
By performing regular customer surveys and analyzing their purchasing habits, you can better understand what products and services they want from your business in the future. While you may not be able to read your customer’s minds, you are able to ask them what they want from your business directly.
Halt Dead Inventory With Global Electronic Services
Keep your business’s dead inventory down by keeping all your sorting machinery and management software up and running flawlessly. Global Electronic Systems has all the parts and equipment your business needs and offers repair and replacement services with a tight turnaround. In cases of extreme urgency, Global Electronic Services offers one to two-day rush services. Call 877-249-1701 or request a free quote today.
