Obsolete Inventory
Symptoms (What do you see…)
- High write-offs.
- Materials in stock can’t be used because they degrade from being too old, expired, or no longer in vogue.
- Low Inventory turns.
- Lack of warehouse space.
- Dust on parts.
- No demand or transactions for a long time. (2 yrs., 3 yrs., 4 yrs., etc.)
Causes (What you’ve got…)
- Over production, buying too much; making too much.
- Bad planning/forecasting including order rules problems.
- Poor design.
- Volume purchasing and manufacturing when smaller lot sizes would work better.
- Poor coordination between engineering and purchasing.
Solutions (What might work…)
- Identify and dispose of obsolete inventory (see what’s dusty/musty, run reports.
- (e.g. “no where used parts”, no transactions in last year)
- Examine why obsolete.
- Change design, production or purchasing process.
- Re-work inventory.
- Improve planning systems.
- Hold a fire sale on excess items.
- Adjust planning rules.
- Improve or better manage forecast accuracy.
- Implement lean techniques.
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