Inventory should move through a warehouse. Employees want to store items in a distribution center with the intention of picking them in the near future to complete an order. Some products are seasonal or have a long shelf and may sit in a warehouse for long periods of time. Other merchandise, however, might not leave at all.
Products in the warehouse that can't find a market are dead. These are items that take up space in a business location but are never sold to consumers. Dead inventory can cost a company time, money and efficiency. To address this problem here are three suggestions:
1. Recognize when a product is dead
Warehouse managers should be aware when inventory stops moving. Material Handling & Logistics said dead products get in the way of normal warehouse operations. Unwanted items cost money to move and store and they are forgotten sales opportunities. Companies also have to pay more insurance based on the amount of materials occupying warehouse space.
Employees should track each piece of inventory. Data collection devices simplify the process of recording and reporting product movement. If a warehouse worker updates inventory procedures into a mobile device, the activity is visible to managers and other departments. Dead products logged in a mobile warehouse inventory management system won't go unnoticed.
If the mobile tools integrate with software from other departments, warehouses may avoid dead inventory. Managers who notice a decline in product sales can avoid ordering more stock from suppliers. If merchandise levels start to rise, marketing knows which items need the most promotion.
2. Classify what killed the merchandise
Complete inventory visibility may provide managers with the cause of the inventory death. Sales projections and customer service records indicate when an item falls of out of popularity. Data histories can show if the slowdown for demand is just seasonal.
Some problems are permanent. Industrial Supply Magazine said companies can move some dead inventory at reduced prices, while other items will never sell. Warehouse managers must take all the relevant data into account when classifying the cause of slow product movements. Mobile devices allow inventory workers to communicate with different departments to determine if a newer product makes an old version obsolete or if an upcoming sales event can push stock. Determining the status of dead inventory helps companies decide what to do next.
3. Liquidate dead materials
Effective Inventory Management described dead inventory as a sunk cost. The company already paid for the products and must find a way to get at least some of its money back.
There are a variety of directions a company may take when liquidating dead inventory. First of all, if the business has a good relationship with a supplier, the business can return the materials in certain circumstances. Second, a company with multiple locations may attempt to sell the products in a different market. Companies can also try offering the items at a reduced cost or as part of a bulk sale.
Even if the merchandise is unsellable, the materials may be broken up and recycled by manufacturers or donated to a charity for a tax write-off. Whatever solution is taken, employees should log the results in a mobile data software system to compare the strategy to an outright loss.
Managers who want to keep better track of their inventory should download the Warehouse Mobile Data Dynamics NAV Module Data Sheet.