3 Reasons you have Obsolete Inventory

When I managed warehouses, my goal was to manage my operations in a Proactive manner instead of being Reactive.  Doing so allowed me to develop processes & procedures to address issues before they became major ordeals.  This was especially true when it came to the daily challenges of managing inventory.  One challenge all companies must face is how to minimize and hopefully avoid obsolete inventory.  Unfortunately, many companies consistently practice the “art” of reacting to every problem that comes their way but they rarely investigate what is causing their pain. 

This is the approach that most companies take with respect to spare parts obsolescence. They don’t manage their spare parts inventory to prevent the accumulation of excessive quantities of obsolete parts and then when this becomes an issue they expect that they can suddenly do something to make all the obsolete parts go away.  

Obsolete inventory doesn’t just appear on the shelves, we put it there. Maybe with initial good intent but minimizing obsolete inventory requires attention to detail and ongoing management. 

Here are just 3 reasons that cause obsolete inventory: 

1. OVER PURCHASING:  Someone on your team bought WAY too much product to start with and now it just sits on the shelf.  Most often this is done by mistake but I still see instances where “inventory managers &/or “purchasing managers” will buy months worth of product “so they don’t run out” or just to keep from placing an order later on.  They think it saves them time.  Believe me, there is absolutely no savings taking place.  

2. OPERATIONAL CHANGES:  Change is going to happen whether we like it or not.  However, wouldn’t it be nice to know about some changes before hand?  In the world of manufacturing, old equipment is phased out and replaced, but what happens with the current inventory of spares for that equipment?   

3. NO REVIEW OF INVENTORY USAGE:  Change once again affects your inventory, this time on a daily basis.  The usage levels of items can & will fluctuate throughout the year. When no one takes the time to review the usage history of items before reordering, then you better start looking for a larger warehouse because you will need it.

By working PROACTIVELY with your team to address these issues, policies & procedures can be designed to greatly reduce and in some cases eliminate the amount of obsolescence within your organization. 

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As an Inventory & Operations Consultant, my mission is to help you find the “LOST” cash in your warehouse.  I accomplish this by developing customized solutions that will make businesses more organized, productive and therefore more profitable.

I always offer a FREE 1 hour consultation but now I’m offering a FREE Audit on your Inventory Management Process.  This $500 value allows you and your team to assess my services at absolutely NO RISK to you. 

 For more information on my services, please visit my website, www.jitsolutionsgroup.com or visit my LinkedIn profile: www.linkedin.com/in/inventoryjoe/. 

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