ADVICE ON DEAD STOCK: HOW TO TRACK AND WHAT TO DO.

What you will consider dead stock in your business will vary from the next person.

Someone considering purchasing your business will most likely have a time on the shelf in mind for measuring dead stock. They may not offer full wholesale price for dead (old) stock.

If you want to sell your business at some point managing to reduce dead stock will be good discipline to maximise the return on your inventory investment.

For the purpose of this advice sheet and as a starting point, dead stock is considered to be any item that has been in the business for six months and that has not sold.

Your POS software ought to be able to report on stock items that have not sold in a period you nominate. In the Tower Systems software it is the Ranked Sales Report.

Run this report or the equivalent for your software. Find out right away what you have in the business that has not sold for six months or more.

The first challenge you could encounter is inaccurate data. If you are not arriving into your software all you sell, not scanning everything you sell, not scanning out all your returns and not checking stock on hand (for theft) at least every few months then the data in the software could be compromised. This could make the report of dead stock somewhat inaccurate.

But run the report anyway, get an initial view of your situation.

Your goal has to be to run the report in the future with nothing showing, or at least considerably less showing that is showing the first time you run it.

If the initial report is too big, focus on one department only. Start small, get your process right, learn from that and then move to the next department.

The Ranked Sales Report, or equivalent in your software is the best way to discover if you have dead stock.

Once you know, what do you do?

This is up to you. Our advice is to remove the burden of dead and out of date stock, to free up the space and capital, even though it has diminishing value.

Look at our advice on quitting stock for tips on what to do next. Also, share the report with us and ask us for business-specific suggestions.

Dead stock can make a business look old, out of date, out of touch and make it worth less.