• Inventory/Warehouse

Where to Bury Your Dead Inventory

Written by Elias Schoelmann
October 30, 2015

Is dead inventory taking up too much warehouse space?

Is dead inventory taking up too much warehouse space?

If inventory stops moving, it may be dead. Retailers must be wary of items customers no longer want cluttering up their warehouse shelves.

Warehouse IQ said there are many reasons products can lose popularity. The items may be out of style, seasonal, replaced by a newer model or past their expiration date. The company has already paid for these goods, so it is hesitant to just throw out materials. Dead inventory, however, must be dealt with before it causes the business serious problems.

A warehouse management system has to recognize the problems associated with dead products, identify inventory past its prime and find solutions for unwanted goods.

Is Your Warehouse Haunted by Problems?

A dead product takes up space that other goods could use. While retailers may feel like they have plenty of room and want to prioritize other inventory management concerns, they aren’t considering what housing the dead costs.

First of all, Demand Media said the size of a company’s inventory could affect the cost of its insurance. Many retailers pay premiums based on the value of the inventory held in a location. The more items, the higher the cost. If part of that inventory is just sitting on a shelf and not bringing in profits, it’s also actively costing the company money.

Secondly, where warehouses store dead inventory could be a problem. Are workers constantly walking past unpopular items to pick products in demand? Retailers can waste time and resources housing obstacles to efficient warehouse operations. Frequently moving unpopular items back and forth throughout a warehouse to get them out of the way can also be costly.

There are other expenses to keep in mind. If a business uses a third-party warehouse, they get charged to store items without a buyer. Retailers who pay for products on account from suppliers need the money from the sale to pay their bill. Late or deferred payments hurt credit and overall finances.

Recognize When Product Health Starts Failing

A warehouse needs a system in place to monitor the distribution of all products. The second a product stops moving, retailers must be aware so they can take the proper actions.

Retail managers need insight into daily warehouse operations. The datastream flowing from inventory movement should be part of all supply and distribution decisions. If a certain type of good starts to fall out of demand, company heads should know before they place a new order with their vendors. Some vendors may even buy back certain products.

Managers must classify different types of slow-moving inventory. Business Know-How, business advice blog, suggested there are items always able to find a market and inventory that becomes too unpopular for any audience. A warehouse management system needs to distinguish which is which, based on other business information.

Mobile data collection devices provide companies with the solutions they need to supervise the health of inventory movement. Real-time information reporting offers managers insight into every inventory trend. The moment demand for merchandise starts to spiral downward, decision-makers are aware. Consistent automated data collection procedures also displays the exact age of each item and provides warnings for when the goods need to find a customer.

Retailers should find a mobile data collection solution that works with existing practices. An RFgen data sheet explained how industries should find a software partner familiar with their particular operations, as well as one that can provide an implementation plan that doesn’t halt daily procedures. New solutions should integrate with existing infrastructure.

Solutions to Get Your Dead Walking

If the inventory management system helps employees detect dead inventory, there are still strategies to prevent loss.

Effective Inventory Management Inc. advised companies with multiple locations to test unpopular products in other markets. Retailers can also contact other suppliers, or even competitors, looking for a buyer for inventory they can not sell. Companies may want to price dead items to move, offer bulk discounts during special events or provide employees with incentives to promote specific products. If nothing else, businesses can donate materials to a good cause for a tax write-off.

Once a retailer recognizes when inventory stops moving and identifies reasons for the slow down, it can find a specific solution to its particular problem. The information provided by mobile automated data collection solutions can help businesses determine if a product is unpopular, outdated, losing value or completely dead.