Causes of Dead Stock and How to Overcome It

Dead stock can become a financial burden and hinder business growth if not handled wisely. When the inventory does not move and continues to accumulate in the warehouse, the company must take action to overcome this problem. In this TransTRACK article, we’ll take an in-depth look at dead stocks, identify the causes of their occurrence, and more importantly, reveal effective strategies that can help manage inventory wisely and deal with dead stocks efficiently.

What is meant by dead stock?

Dead stock or deadstock is a term used in the business world, especially in inventory or inventory management. Dead stocks refer to goods or products that are unsold or unused over a long period of time and tend to accumulate in warehouses or stores without any demand or interest from customers.

Dead stocks are a problem for companies because they can cause financial losses. Items trapped in dead stocks not only take up valuable storage space but also cause additional expenses to maintain and store unproductive inventory.

To deal with dead stocks, several actions that can be taken by companies include special marketing strategies to sell these goods, large discounts, or even re-evaluating inventory planning policies to make them more effective in avoiding dead stocks.

Causes of dead stock

The following is a further explanation of each cause of the dead stock:

Error in Predicting Market Demand

Lack of accuracy in forecasting market demand causes companies to order or produce too many items which ultimately results in the accumulation of unsold inventory.

Overstock

Overstock occurs when a company has too much inventory due to errors in inventory planning or because the company deliberately buys too many items to take advantage of discounts or special offers from suppliers.

Damaged or Expired Items

Goods that are damaged or past their expiration date tend not to be sold, resulting in unproductive inventory accumulation.

Products Not Selling in the Market

Goods that do not suit market tastes or needs will not sell well in the market and become dead stock.

Less Innovative Products

Outdated or less innovative products can lose their appeal to consumers, causing dead stock to develop.

Lack of Flexibility in Production

If a company has a production system that is less flexible, it is difficult to adjust production quantities with fluctuating demand, which can lead to dead stock.

Lack of Coordination with Suppliers

Imperfections in communication with suppliers can lead to additional inventory that is not coordinated with market demand.

Poor Product Quality

Products with low quality or do not meet standards can cause a lack of interest from consumers, resulting in dead stocks.

Uncontrollable Overproduction

Excessive production without consideration of market demand can lead to accumulation of unsold goods.

Lack of Stock Monitoring System

If companies do not have an effective stock monitoring system in place, they may not become aware of accumulated dead stocks until it is too late.

Addressing and preventing dead stocks requires careful inventory planning, accurate market demand analysis, product quality management, good supplier cooperation, and efficient stock monitoring.

How to Overcome Dead Stock

The following is an explanation of how to deal with dead stocks through the strategies you have mentioned:

Provide Discounts on Dead Stock Products

Providing discounts on dead stock products is one way that is commonly used to overcome this problem. Attractive discounts can grab consumers’ attention and encourage them to purchase items they may not have considered before. Discounts can include specific price reductions or special discounts such as “buy one get one free” or “next buy discount.” While selling at a discount can reduce profit margins, it can be better than carrying unproductive inventory.

Do Bundling with Other Products

Bundling is the practice of combining dead stock products with other products that are more in demand or popular. In this way, companies can increase the value of dead stock products and sell them as part of a package that appeals to consumers. Product combinations can also encourage sales of other products that might not sell well without being combined with dead stock products.

Returning Products to Suppliers

If product dead stocks are the result of errors in inventory planning or overordering, consider returning the product to the supplier. However, be sure to check the terms and conditions of the deal with the supplier regarding returns. Some suppliers may have strict return policies, while others may be more flexible.

Donate Dead Stock Products

Donating dead stock products to charities or non-profits is another way to tackle this problem. By donating unsold items, companies can reduce financial losses and help society at the same time. In addition, this step can also strengthen the company’s image as a company that cares about the environment and society.

However, before donating a product, it is important to check the rules and regulations that apply to specific product donations. Some products may not be suitable for donation for health or safety reasons.

It is important to remember that dealing with dead stocks is about managing inventory more efficiently and strategically. Implementing some of the strategies above can help reduce the accumulation of dead stocks and maximize the sales potential of existing products. In addition, regularly evaluating and improving inventory planning and market demand analysis is also important to avoid dead stocks in the future.

One solution that can help companies overcome dead stock is to use the Logistic Service Integrator from TransTRACK. Logistic Service Integrator from TransTRACK is a platform that integrates various logistics services into one efficient system. By using this platform, companies can monitor in real-time the movement of goods from suppliers to warehouses to end customers. This allows companies to have greater visibility over their entire supply chain, thereby identifying and addressing potential dead stock more quickly.

By using the Logistic Service Integrator from TransTRACK, companies can optimize their inventory management, reduce the risk of dead stock, and increase efficiency in their supply chain. Dealing with dead stock is no longer a big challenge when companies have the right tools to better manage their logistics.

So, to overcome dead stock problems and improve your business performance, immediately take advantage of TransTRACK’s Logistic Service Integrator services. Gain better visibility of your inventory and improve customer satisfaction with more efficient and integrated logistics services. Contact TransTRACK today and see how their innovative platform can help your business achieve greater success in supply and logistics management.

Topic