Hold flash sales, create an outlet store, or dedicate a clearance section on your website. Seasonal or themed sales events can also attract customers and obsolete inventory help you move excess stock at a reduced price. It ties up valuable resources, takes up precious warehouse space , and puts a damper on profit margins.
And depending on what it is, it may also need attention, in which case it’ll be taking up your employees’ time without benefit to you. Accounting for https://www.bookstime.com/ and its value is critical, as it can impact a company’s financial statements. When obsolete inventory benchmarks are reached, the cost of goods sold and the value of total assets will both decrease. Obsolete inventory is any product sitting in a warehouse for too long and no longer has a buyer.
Is obsolete inventory bad?
By implementing lean manufacturing practices, businesses can improve their agility and responsiveness to changes in demand, reducing the likelihood of obsolete inventory. It is important for businesses to carefully consider the impact of liquidation on their brand reputation and customer relationships. They should ensure that the third-party buyers they work with adhere to ethical and responsible business practices and that the products being sold are not counterfeit or defective. Regular, frequent trend analysis of usage/sales is the main method of identifying potential slow-moving inventory and the reduction of excess inventory.
Inventory management can also help brands detect seasonal trends and allow them to get ahead of both high and low demand forecasting for specific products. For example, a beauty brand might notice that demand for products with SPF starts to pick up in the spring and reaches a peak in the summer. While this trend seems obvious, inventory tracking might also help the same brand detect a smaller demand increase around the end of the year when people might be taking tropical vacations. Consider rebranding or repackaging products to make them more appealing to customers. You can also target new customer segments by exploring niche markets or demographics that may have been previously overlooked.
Lack of supply chain data
The software produces reports, insights, and advanced analytics you’ll find invaluable when making decisions about buying new inventory. When you base your buying decisions on information like this, you have a much better chance of having best-selling items in stock and avoiding those slow movers that can end up being obsolete. It helps to identify slow-moving items, obsolete inventory, and dead stock that can take up valuable storage space and increase holding costs. By performing regular audits, businesses can quickly remove these items and optimize storage space, allowing for a higher volume of faster-selling products.
- They can adjust their inventory levels, implement promotional strategies to boost sales, or even phase out the product if necessary.
- However, excess and obsolete inventory can pose a significant challenge to businesses.
- Obsolete inventory can also have a negative impact on a business’s productivity.
- But enterprises with a wider product range need to switch to automated processes that can simplify the audit process and share real-time updates.
- To liquidate inventory, you’ll want to work with a surplus reseller specializing in moving “unwanted” inventory.
- Wear – Few people will try to sell a counterfeit Mantle in pristine condition as 65-year-old cards will typically display wear.