Sunday, August 17, 2008

Dead inventory - moderate risks

There is a greater chance that these new stock items will eventually become dead inventory. Salesperson and customer "suggestions" represent the most common type of moderate risk item.
Notice that sales spike shortly after the item is introduced to inventory. This is probably due to the fact that salespeople are featuring this product in their sales calls. As time goes on, salespeople don't talk about this product as often. In fact, their attention may be centered on more recent additions to inventory! They forget to remind the customers who asked that the product be stocked why they aren't buying more of the item.

To reduce the chance of these items becoming dead inventory, you must continually remind the salespeople of the sales and current stock position of all new stock items. Print and distribute a report containing the following new product information to each salesperson each week, or at a minimum each month, until the product has been in inventory for five to six months:

* Product number and description.
* Current month sales (in units).
* Sales projection for the current month (provided by the salesperson before the item was added to inventory).
* Total sales (in units) of the item to date.
* Total sales projection to date (provided by the salesperson before the item was added to inventory).
* Current on-hand quantity.
* Manually set minimum stock level of the item.
* Manually set maximum stock level of the item.
* Name of salesperson who requested that the item be stocked.
* Reason why the item was added to stock.

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