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How to deal with Obsolete inventory?

How to deal with Obsolete inventory?

What is obsolete inventory?

Obsolete inventory also referred to as “obsolete stock,” “dead inventory,” or “excess inventory” is a term used to describe items that have come to the end of its product life-cycle. This means that there is no market demand for the product anymore. Most businesses determine that its inventory is obsolete once there are no sales after a set amount of time.

How is obsolescence created?

Obsolescence is created by a few different factors, such as:

  1. Planned obsolescence
  2. Inaccurate forecasting
  3. Inefficient Inventory management systems
  4. Poor quality product
  5. No proper management of obsolete inventory

Planned Obsolescence

Planned obsolescence, or built-in obsolescence is a policy of planning or designing a product with an artificially limited useful life. This is done so that it becomes obsolete (i.e., unfashionable, or no longer functional) after a certain period.

Producers that pursue this strategy believe that the additional sales revenue it creates more than offsets the additional costs of research and development, and offsets the opportunity costs of re-purposing an existing product line.

Inaccurate forecasting

Inaccurate or incorrect forecasting for the demand of the part or product can lead you to order more stock than you need – leaving you with obsolete inventory after selling only a portion of what you stocked. This problem can be solved by using inventory management software, which can remove the element of human error from stock maintenance.

Inaccurate forecasting can lead to companies stockpiling unwanted or excess stock which can take up their precious warehouse space and block future earnings by just taking up space.

Inefficient Inventory management systems

When a company grows, managers should focus on inventory management since it is the one area that can improve business efficiencies and help in cutting costs. Inefficient inventory management can lead to obsolete stock if left unchecked.

Poor quality product

Offering a high-quality product should be an obvious step for reducing obsolete inventory, but plenty of retailers, wholesalers, and manufacturers sell shoddy products. If your product doesn’t meet the standards of consumers, or it fails to offer anything new to compete against existing products, it probably won’t sell- thus leading to obsolete stock that you may need to write off or sell to excess stock buyers.

No proper management of the inventory

There are ways that companies can manage obsolete inventories. E.g. scrapping the excess stock, selling them at a discount or selling them to excess inventory buyers – who can help create a workflow for your excess or obsolete stock until companies can streamline their workflow to reduce or eliminate excess stock and product.


How do we deal with Obsolete Inventory?

There are many ways of dealing with Obsolete inventory, some of them being as follows,

  1. Correctly forecasting demand
  2. Track inventory in real-time
  3. Have deals with excess inventory buyers

Correctly forecasting demand

Accurately forecasting demand is a crucial factor in dealing with obsolete inventory. If time is spent on going through previous year’s sales trends and focusing on inventory that moves faster and paying attention to what your competitors are doing.

This will lead to less frivolous stock being ordered and improve your sales as well.

Track inventory in real-time

Tracking your inventory in real time through a cloud based inventory management system will not only let you pin-point exact reorder times but also tell you what stock is moving and what stock is not, thus helping you push offers or create discounts to get the slower stock moving, thus reducing , if not eliminating obsolete stock.

Have deals with excess inventory buyers

One of the best options out there is to contact professional excess stock buyers who will either buy the obsolete stock off you for a fixed price or work with you to further sell your excess stock while you focus on your current stock. If excess or obsolete stock is something the company deals with on a regular basis, having these guys on stand-by may prove beneficial.


If you do find yourself with excess electronic components, give us a call on +44 (0)1904 436 444 or send us your stocklist by uploading it here.



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