Right, firstly we apologize to any George A. Romero fans we might have offended for repurposing and rephrasing that quote.
Secondly, even though the quote was originally referring to a less than convenient zombie outbreak, the sentiment still applies when it comes to inventory management.
Today, we’re looking at the zombie equivalent of the manufacturing world, dead stock.
Remember those horror stories you heard when you were growing up? Such and such a place are haunted by a young maiden who was left at the altar on the day of her wedding and now spends her free time terrorizing those who dare venture to the location.
Creepy. But, the issue with these stories is that more than likely, they’re not true.
But if you really like a scare (and you’re a small business owner who manufactures their own goods) we have a spooky tale for you. The worst part being, it’s true!
Like the unwed specter, sometimes your items don’t sell and get left behind on some unlit shelve in your inventory. And it sits there, surviving by eating up space and devouring your company’s capital.
You don’t need this zombie-esque product doing all this munching behind your back, so we’re going to teach you how to exorcize dead stock and get more control on your inventory.
So, let’s begin, assuming you don’t want to get overrun by the dead stock.
Cue lightning strikes.
What Is Dead Stock?
Dead stock is basically products which don’t sell and wind up being stuck in inventory. There are several reasons as to why you end up building dead inventory:
— An item’s popularity;
— An item has become obsolete;
— Overzealously stocked too much inventory; or
— Bad inventory management means an item has been forgotten.
However, there is one more factor that was intentionally left off the list, because this is probably the biggest reason as to why items become stuck on shelves.
This reason is denial!
You might say to yourself, “It’s not doing any harm,” and, “it’ll sell, eventually.” But this denial is only prolonging something which is ultimately damaging your business.
Regardless of the reasons you may have ended up with a dead stock infestation, they all lead to the same issues.
If you do not curb your dead stock, you can expect to take up space for products which do earn you that sweet “cha-ching” and drive up your carrying costs.
Don’t kick yourself if you do have dead stock in inventory, many companies discover a literal graveyard in their inventory.
These sneaky products which have become squatters exist under the ghost economy, which you might not realize could be costing your business 11.7% of its revenue.
The biggest tip we can give you for avoiding dead stock is to improve your inventory management techniques, and the best way to do this is by adopting an inventory management software into your business.
Businesses without good inventory management systems are the most prone to gathering dead stock, leaving their products to become forgotten and even obsolete.
For more cultural references, and to move away from the horror theme, without inventory management software your products can become just like Wheezy, a squeaky toy from Toy Story 2, who sits abandoned on a top shelve, “I’m just one stitch away from here, to there [gestures toward a yard sale].”
Though, Wheezy does present some good tactics for dealing with dead stock (sorry Wheezy). But before we move on to that we need to make something crystal clear.
Dead Stock vs Deadstock
There’s a lot of confusion surrounding the correct terminology to use when talking about the issue of dead inventory.
Is it dead stock or deadstock? Does it matter which spelling you use?
If you investigate other pages on the internet, they might use deadstock. However, this is technically incorrect as it means something else.
So, just to clear up any misunderstandings: