Clearing dead stock: a step-by-step plan

In the corner of every warehouse sits stock that was left with the thought, "it will sell one day". It takes up space for years, ties up money, gets in the way of searching and brings new costs every month. The manager puts off clearing it because selling at a discount feels like admitting a loss. In fact the loss has already happened, and the only question now is how long and at what price we keep paying for it. Below are four steps to clear dead stock.

Step 1: set the threshold and make a list

What counts as "dead" you decide yourself. For example, an item with not a single sale in 180 days; for perishable goods the period is far shorter. Pull a list from the system by date of last movement and note a cause for each item: a mistaken order, an outdated model, the season ended, a quality problem, the customer refused. The cause determines the decision: a quality problem goes back to the supplier, while after a finished season you choose between keeping until next season and a discount. When making the list, the warehouse manager and the sales department should sit together: sales often knows better than the warehouse why an item is not selling.

Step 2: count the price of storing it

The cost of idle stock does not end with its purchase price. To it are added a share of warehouse space, tied-up money, and the risk of loss and obsolescence. An example, with illustrative figures. Goods with a purchase value of 40 million so'm have had no movement for 200 days. If space and tied-up money are taken at about 2 percent a month, that is 0.8 million so'm a month. Five more months of waiting add 4 million so'm, and the goods age further. If instead we sell them at a 25 percent discount within two months, we "lose" 10 million so'm, but 30 million so'm of cash comes back and the space is freed. That money can be put into stock that turns. Do this for each large item; if the list is long, start with the ten that tie up the most money, since the main sum often lies there.

Step 3: the exit ladder

Start with the route that loses least and go down it rung by rung:

1. Return to the supplier or exchange for other goods. If the contract allows, make this the first attempt.
2. A bundle: offer the slow item together with a well-selling one.
3. A staged discount: for example every 3 to 4 weeks from 10 percent to 20, then 30. Fix the steps in advance.
4. Other channels: wholesale buyers, shops in other regions, market traders, a promotion in a Telegram channel or on an online marketplace.
5. Use or charity: use it for internal needs or, if the goods are fit, give it to people in need.
6. Write-off and disposal. Agree the tax and paperwork side with the accountant beforehand.

Give each rung a deadline: for example two weeks for return, a month for a bundle and discount, another month for other channels. When the deadline passes, move to the next rung and do not stall at "let's wait a little longer".

Step 4: a deadline and an owner

Each item needs a decision date and a responsible person. "We'll see" is not a decision. Once a month review the list: what has sold, which item moves to the next step, what is written off. If the list is getting shorter, the plan is working. Do not leave write-off decisions to the warehouse manager alone: a large sum needs a second signature (the manager's or owner's).

So that it does not pile up again

Clearing out makes sense only if new accumulation stops. Look at the stock age report every month, test new goods first with a small batch, and do not over-order to qualify for a minimum-quantity discount. Add an indicator for the person responsible for purchasing: the share of stock lying more than 180 days. Without an indicator the problem will quietly grow again. Remember: a discount solves the problem, not its cause. If the cause is not removed, the same list will appear next year.

Conclusion

Dead stock is a silent cost, but it can be made visible and removed with a staged plan. The OmborExpert specialists help analyse the age of stock, draw up an exit plan and write rules that stop leftovers from piling up again.