Facility Dude

Ways to reduce your dead inventory

By Kate Donnelly
Dec 08, 2014

InventoryEdge, Facilities Management

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reduce dead inventory Keeping track of your facility's budget involves more than just maintenance management and capital forecasting. If you aren't extending your budgeting efforts to your supply closet, there's a good chance you're losing money without even realizing it.

Every facility strives for the legendary 1:1 ratio between supplies bought and supplies used, but the reality is that that's more or less impossible. That said, while dead inventory may be a fact of life, there are things you can do to help reduce it, saving your facility money in the process.

Know where dead inventory comes from

Inventory doesn't show up at your facility dead on arrival. It's a result of poor planning or other user-facing conditions that result in things not being used. The first step in keeping your inventory from flat-lining is, as you probably guessed, a thorough evaluation of your current inventory across different departments. It may seem like busywork, but such an assessment will give you the clearest picture of which areas are overstocked or understocked. Don't just limit your evaluation to your physical assets on the shelves, either. Epicor recommended also referring to your facility's purchase orders to see how much of a given item is bought, and how often. This collection of data can help you know exactly where the money is going and where it's being wasted.

Become best friends with data

The key to managing inventory and keeping your purchasing efficient is data. Grainger recommended that every inventory item - whether it's paper towels for the bathroom or components for a boiler - be incorporated into a larger overall picture of how your facility functions. Such an approach is greatly facilitated by an inventory software, which can keep track not only of how much of a given item you have at any one time, but how often they're purchased, what they're used for, and where they can be found.

What to do when inventory dies

Dead inventory is an inevitability, but it doesn't have to spell disaster for your facility. Material Handling & Logistics outlined ways in which FMs can take their expired stock and dispose of it in ways that can be beneficial and lucrative to the company. The source recommended donating extremely overstocked items. While first instinct may be to try and sell unneeded stock through a bulk purchaser or liquidator, donating provides a unique advantage in the form of a federal tax credit.

Not only can these deductions often be more than the amount per-item you'd receive from a liquidator, but it can also lead to a synergy of benefits, allowing you to not just avoid losing money but actually make more. By getting rid of overstocked items, you can free up warehouse space, allowing you to bring in more of what you genuinely need.

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