Executive Briefings

As Much as 30 Percent of Inventory Could Be Dead or Obsolete

Quite often, even among well-run businesses, the actual costs of inventory are inaccurate, underestimated and incomplete. While most resellers know they have dead inventory, many are unaware of just how much. Studies show that in even well-run companies, anywhere from 20 to 30 percent of inventory is dead or obsolete.

While that is huge and alone could have devastating ramifications for a business, how does one calculate the real costs to determine the hit that your business is facing? The easy answer is to take the unit cost for those dead items, add them up and you have your answer. But not so fast. There are many other hidden costs to consider before determining the true cost of your dead inventory. Ignorance about these costs of dead inventory place your business in peril. And addressing the dead inventory problem can breathe life back into a troubled situation. So what are some of the other very real costs that complete a more accurate calculation of dead inventory costs?

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While that is huge and alone could have devastating ramifications for a business, how does one calculate the real costs to determine the hit that your business is facing? The easy answer is to take the unit cost for those dead items, add them up and you have your answer. But not so fast. There are many other hidden costs to consider before determining the true cost of your dead inventory. Ignorance about these costs of dead inventory place your business in peril. And addressing the dead inventory problem can breathe life back into a troubled situation. So what are some of the other very real costs that complete a more accurate calculation of dead inventory costs?

Read Full Article