Dead and Buried Inventory

"99% of the small and medium sized distributors in North America have no tools to identify dead stock."

"As much as 40% of the inventory in the average warehouse is dead stock. It's costing them money just being there."

That's according to Bill, who's worked in industrial distribution for decades, and determined this a few years ago when he was president of a group of distributors. Chatting with him yesterday, I was quite surprised by the strength of his assertions, and even more so by the information with which he backed them up. Bill tells me that he's seen the impact of identifying and dealing with dead stock first hand. His company was able to put several hundred thousand dollars into the bank almost overnight, with  ongoing savings in overheads thereafter.

Bill says that people confuse slow moving inventory with dead stock. While there is some overlap, he says, there's a huge difference. For example, you may have a product that doesn't move for 5 or 6 months, but when you do receive an order, the value it adds to the bottom line justifies the carrying costs. Compare that with the product that turns over several times a year, but contributes very little to the bottom line. In many cases the clues to identifying dead stock are buried quite deep.

My curiosity is piqued. I'll be investigating over the next few weeks and will post regular updates.

Inventory Management Techniques