Is dead stock a problem for your inventory? Do you find that your business is losing money on inventory that never sells? Let’s take a look at this serious issue in inventory management—what it is, which NetSuite inventory management tools can help you reduce dead stock, and how SuiteRep’s NetSuite Dead Stock Report provides an exact picture of your current dead stock.
Dead Stock Overview
Dead stock is a nightmare for businesses. It ties up valuable warehouse space, reduces your revenue, and can end up costing the business even more than the value of the items in the long run.
What is Dead Stock?
So what is this terrifying thing called dead stock? In its most straightforward form, dead stock—also referred to as dead inventory or obsolete inventory—is inventory that you can’t sell. Think about a bin of rotting potatoes at your local grocery store. That’s dead stock.
Of course, dead stock isn’t always so obviously unsellable as a bin of vegetables gone bad. A number of factors can cause your items to be labeled as dead stock. Inventory that has gone out of style, seasonal inventory, overstocked inventory, or inventory for which the demand has sharply and unexpectedly declined are all examples of inventory that a business might find itself unable to sell.
Managing Dead Stock
Businesses often need to get creative in the ways they get rid of their dead stock. If you’ve ever purchased clothing from the clearance rack, you’ve experienced one of those creative ways. Some businesses may try things like bundling dead stock items with popular items or even throwing in a dead stock item as a freebie on qualifying orders.
But however a business tries to deal with dead stock, it almost always means a loss for the company. As much as you may like clearance as a shopper, writing off items as a loss hurts a business’s bottom line.
NetSuite Dead Stock Tools
NetSuite has several features that allow you to prevent how much dead stock you end up with.
First, NetSuite has a robust demand planning feature. With NetSuite’s demand planning feature, you can determine how demand will be calculated. The key metrics that NetSuite uses to calculate demand are historical data, a moving average, a seasonal average, or a sales forecast. After setting up a particular calculation for demand, you would select specific items the demand schedule applies to. Then, you’ll be able to see an Item Demand Plan record for each item.
How does demand planning prevent dead stock? The better you can predict upcoming demand, the greater your chances of being able to sell all your stock. Dead stock is often a result of faulty demand planning.
In addition to demand planning, NetSuite also has inventory management reports that allow you to easily assess your current stock levels. For example, some inventory level reports include Viewing the Stock Ledger, Current Inventory Snapshot, Items Pending Fulfillment, and the Inventory Turnover Report. When you pair these reports with data from your demand planning, you can have a good idea both of what your current inventory levels are as well as what healthy inventory levels would look like for your company.
NetSuite Dead Stock Report
NetSuite’s preventative features are great, but one key feature NetSuite does not natively provide is a report that simply identifies your dead stock. That’s why at SuiteRep, we created the NetSuite Dead Stock Report. Let’s take a look at what this report is and how it works.
Dead Stock Report Features
At its core, the Dead Stock Report gives you a snapshot of inventory that isn’t selling. You get to choose the point at which inventory is considered “unsellable” and shows up on this report. For example, you may want the report to show any inventory that hasn’t been sold in over 90 days.
The report also shows the total value of your dead stock, which is calculated from the purchase price of the items. This metric shows you exactly how much you have already invested in these items and (subsequently) how much you will need to write off as a loss if you can’t sell them. Additional features on the Dead Stock Report include the date of the last sale for the item, when you last purchased the item, and the total quantity on hand, available, and on order.
Dead Stock Report Value
The Dead Stock Report is immensely valuable to companies that want to reduce their losses from dead stock. For one thing, this report will help you optimize your purchases. If an item is demonstrably unsellable, you probably don’t want to keep purchasing it! This report will help you to avoid purchasing items that will automatically be categorized as dead stock because of how long it has been since those items were last purchased.
This report is also valuable because it can help you reduce your losses on dead stock. Dead stock is often a write-off, but the sooner you identify your dead stock, the sooner you can start strategizing creative ways to reduce your overall loss on those items.
Pairing SuiteRep’s NetSuite Dead Stock Report with NetSuite’s own demand planning and inventory features gives you enhanced visibility and control over your dead stock. If taking control of your dead stock is something you’re interested in, check out the SuiteRep Dead Stock Report.