Battle Plan To Fight Dead Stock
By Bob Boyles, Principal
Smarter Distribution

The old saying goes “the only two sure things in life are death and taxes”. If that person had been a wholesaler that saying might have been something like, ”the only two sure things in wholesaling are taxes and dead stock”. To distributors the sad truth is, if you carry stock then you are going to have some amount of dead stock.

Dead stock is a symptom of a problem in the purchasing and inventory management process. Like a fever in the human body a small amount can go practically unnoticed and cause very little harm but left untreated it can develop into a huge problem that can be deadly. So like a fever, once we see the problem developing we need to take immediate corrective action to prevent dire consequences later.

The first thing you need to do is agree on a definition for dead stock. A generally accepted definition in wholesale distribution of dead stock is a product that has had a sale for one year. Dead stock can result from a lot of different scenarios. The product may have been a wonderful mover for years

There is another form of dead stock that we need to understand and that is surplus inventory. Surplus inventory is another form of dead stock that indicates completely different problem. The major solution with surplus inventory is to correct the purchasing process and then sales will reduce the levels of surplus naturally over time. nlike surplus inventory, with dead stock there are no sales to correct the problem over time so there needs to be a pro-active plan in place to move the dead stock out of the warehouse.

You need to develop a pro-active plan that consists of several key components.

A. Assign some one the task of eliminating the dead stock problem.

B. Get a correct measurement of your problem.

C. Assign a cross functional team to work the dead stock problem.

D. Develop a hierarchy of steps to move your dead-stock.

• Return to vendor
• Trade with the vendor
• Promote it.
• Pay salesmen to sell it.
• Internet options
• Donate it and write it off.
• Throw it away

E. Meet regularly with your team to track their performance.

I know that the first step sound pretty basic. But you would be amazed at the number of companies that have no one in charge of the eliminating their dead stock problem. Most wholesalers assume that the problem falls into the realm of purchasing after all they’re the ones that bought the stuff, right? As we’ll see only a few of the steps that we’ll undertake to eliminate our dead stock directly involve the purchasing department. Companies that a large enough hire a person whose sole job function and responsibility is the reduction of dead stock.

About Bob Boyles and Smarter Distribution:

Bob Boyles started his strategic consulting business in 2001 and has focused on the change that technology is forcing in the supply chain and how independent distributors can not only respond to that change but also maximize the return they are seeing on their investment. Bob has spent a significant amount of time as an Installation Consultant for several of the big name software companies in the distribution market. Working with hundreds of distributors across the country on installing, upgrading and utilizing their software. Bob also worked as Corporate Systems Manager for one of the largest electrical wholesalers in the country as that company moved from a completely manual operation to an on-line real-time system.

Bob is a graduate of Appalachian State University (BS - 1981) and University of North Carolina at Greensboro Graduate School of Business (MBA - 1985).

© Copyright 2002, Robert S Boyles, Jr. All rights reserved. This article cannot be reprinted or reproduced in whole or in part, without the express written permission of Robert S Boyles, Jr.