Dead Stock is that stock of the warehouse which is left unused for a very long period of time. The dead stock comprises the merchandise which was never sold or used by the customers because they were out-dated and removed even before the sale started. You can calculate how much the dead stock value is by multiplying the weight of the unusable stock with the current price of the market.
If the total value of the dead stock is zero, this means that the stock can’t be moved further and all the materials are dead. To track the Dead Stock Movement the code that is used is T-code MC50. If there is a positive margin value of usage then these stock can be offered for sale if the entire packaging and the original tags of the products are retained. These types of stock are known as the slow-moving stock. These slow moving stocks are identified by the code MC 46. They are mainly retained for six months at the warehouse.
You can analyse what amount of stock remained untouched for a certain period of time by formulating a dead stock report. This dead stock report will help you to graphically see your stock levels over a span of time and help you to fix this issue. Suppose, in your report, you can see that for a period ranging from 1-5, the stock never dropped below 30. This means that 30 is the limit and it is that part of the stock which remained untouched.
Now, if your set of safety stock is set at 10, then you can predict that you are overbuying products. If it is at 50, then you know that you have used some of the goods of your safety stock. Suppose your safety stock is set at 30 and the stock is not dipping below this level for one whole year, then you should know that your safety stock is set at a higher level. A safety stock is primarily created to cover the entire sudden rise in demand and supply of the product. But, if the stock is ‘never’ dipping below 30, then consider the fact that there is no necessity of a safety stock.
Tips to combat Dead Stock:
- Create an inventory tool by which you can always calculate how much excess stock you have in your current stock and you can also integrate the inventories of multiple locations into a single system.
- Create urgency and sell off the dead stock as soon as possible without wasting much time. Advertise that it’s a limited supply product and only 3-4 products are available in a particular venue at a lower price rate.
- You can also offer relevant discount coupons to get rid of the excess stock.
- You can also include them in your regular deals and sell them off a discounted rate.
- Bundle the relevant products and sell them off to cut down multiple excess stocks.
- Upload the products on price comparison websites to grab attention and provide free shipping!
You can read more about difference between dead stock and slow moving stocks on Stechies.com and get an idea of how to manage it efficiently.