How to minimize slow moving or dead stock in your Warehouse
If you are looking over your warehouse stocks and are wondering how on earth you ended up with so much slow moving or dead stock, we have listed below a few tips that will be helpful to you.
Rafael “Raffy” Pefianco of RMP Consultancy conducts Inventory Control training at TNC Chemicals Philippines, Inc.
Many of our clients have this same experience. A typical example of the sequence of events goes something like this:
You have a winner of a product. It is selling like hotcakes and you are making great profits. You want to sell a lot more while the market is hot. You are quickly running out of stocks, so you keep on buying larger quantities. After a few months, sales begin to go down and finally stop.
You are now looking at your warehouse and wondering how on earth did I accumulate all this slow moving stocks? What happened?
What you have just experienced is called the product lifecycle. Sales are slow at first, then they begin to accelerate, plateau and then go down. Most products go through a life cycle like the curve shown below.
The demand for smart phones and their accessories is a good example of this phenomenon. A newly launched product can become obsolete in only a few months.
If you want to avoid ending up with a lot slow moving or dead stock, you can do the following:
- Keep an close eye on your stock movements
- Use time series forecast analysis to determine if the demand for your product is stationary, tending up or trending down.
- Avoid buying large quantities at one time
- Buy in smaller quantities more often
Train your staff in the use of forecasting techniques and analytical tools
There are many tools that your staff can use to quickly analyze demand and inventory. Many of these tools are already part of spreadsheet software like MS Excel. What your staff needs in training in how to use these tools and how to read the results.
RMP Consultancy works with companies that have concerns about the following topics:
- Inventory Levels
- Forecast Accuracy
- Customer Service Levels
- Safety Stock Determination
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