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Four Steps to Managing Dead Inventory (Part 3 of 3)
In the first two parts of this series, we discussed the initial steps to proper management of dead stock: Identify, Prevent and Coordinate.  When all of these steps have been taken and you still have excess or dead inventory on hand, the final action available is to dispose.
 
Dispose
Disposing of your dead inventory can help recoup some capital and save additional carry cost.  Here are several options:
  • Transfer stock to other locations that are actually selling the items (also referred to as “balancing inventory”).
  • Substitute the “dead” items for like-moving, less expensive items. This way, the customer gets a good deal, and you move what would otherwise be dead inventory. 
  • Return items to your supplier, possibly for newer selling items. Some suppliers have a 2-for-1 deal: you can send one back if you buy two to replace it.
  • List the items as dead with Epicor Trading Partner Connect, which will put these items before hundreds of distributors.
  • Search the Internet for dead stock buyers.
  • Appoint or hire a dead inventory manager. This could be a retiree, possibly paid based on results.
  • Reduce the selling price to “move the items.”
  • Junkyard; scrap metal; recycle.
  • Donate items to a local technical college.

Conclusion
You can free up resources now tied up by dead stock, including valuable time, warehouse space, and inventory dollars, by:

  • Creating ABC classes for new and dead items, as well as non-stock items.
  • Managing classes every period, not just yearly or seasonally.
  • Comparing high-dollar dead items to sales history reports.
  • Appointing or hiring a dead inventory manager.

Posted by Neil VanWalbeck, Senior Professional Services Consultant at Epicor Software

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