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What is “dead stock”? How does it affect your business? How to avoid it?

Dead Stock Management

Understanding how to avoid dead-stock inventory and deal with the things that will undoubtedly end up on your shelves will help you boost your bottom line. Modern retailers employ a number of techniques and strategies to achieve optimal safety stock levels and eliminate dead stock. You must establish an excellent inventory management system to keep an orderly and precise record of your inventory count. Due to efficient inventory control procedures, using best practices for dead stock management will also enable you and your staff to further protect against dead stock.

This blog will give you some tips on how to manage and get the most out of your unavoidable dead stock inventory. Because there will always be some dead stock, no matter how strict the controls are.

 What is “dead stock”?

 The term “dead stock,” also known as “dead inventory” or “obsolete stock,” refers to products that aren’t expected to generate revenue and can negatively affect a company’s financial health. Unsold seasonal items, damaged goods, inaccurate deliveries, out-of-date raw materials, clothing, and fabric can all be added to the list. Food and medicine are two examples of perishable items that can quickly turn into dead stock since they usually need to be thrown away after a certain period of time. Inventory that has not been sold after a year is typically regarded as “dead stock” and is recorded as a liability.

What causes dead stock?

No matter how well your dead stock management techniques are, you may still have some dead stock.

Let’s look at the most popular ways to solve this problem for businesses, how to avoid it, and how to reduce dead stock.

Poor customer interest

Customer satisfaction is important in marketing because if customers don’t like your product or don’t think it’s worthwhile, your sales will undoubtedly suffer, and your performance will suffer as a result. In order to provide customers with the best service and boost sales, you must work closely with them and understand their needs and what the majority of customers are interested in.

Erratic ordering practices

The most important step in preventing excess inventory is to track inventory metrics that are important to your firm. These indicators include the minimum stock level required before making a new order, the average daily use rate, the lead time for orders, how long it takes to sell inventory, and how much variety should be offered. As your firm grows, you can evaluate your SKU (stock keeping unit) count to identify which products sell quickly and which sell slowly, and then carry fewer of each. This will assist you with erp for inventory management on a consistent basis.

Poor sales

Due to exorbitant prices, unsuitability for customer needs, and intense competition, many stocks became obsolete. To avoid this, businesses must alter their marketing strategies to appeal to their target market, become more customer-focused, adjust pricing, enhance inventory management, and consider other factors. Also, to boost sales, they might hold contests, give awards and prizes, and provide special discounts to customers. As a result, the overall performance of the company will improve and sales will increase.

Erroneous forecasting

Unrealistic expectations, poor data, and external influences can all lead to erroneous estimates. To avoid this, businesses could adopt strategies such as monitoring order histories, keeping an eye on their competitors, and considering the economy. A solid ERP (enterprise resource planning) system should be adopted as well, which includes inventory management system features as well as pattern detection and forecasting capabilities.

Drop in demand

Using effective software for inventory management can help businesses reduce excessive ordering and prepare for times of low demand. With the help of a flexible supply chain and good visibility into it, faster modifications can be performed. Since external factors are beyond our control, we must implement efficient inventory management procedures.

Issues with quality

The quality of the product and the packaging in which it is presented to the customer come first when selling something to them. When you serve quality products in packaging that appeals to your target market, your business’s sales will undoubtedly increase. Conversely, if the quality of the product does not meet the needs of the consumer, it will remain on your shelves as dead stock. Therefore, keep an Keep an eye on the quality and packaging of your products and stay in touch with your customers to find out what they need and prefer in order to prevent dead stock.

How to avoid dead stock?

How to avoid dead stock?

 Invest in inventory management software

One of the key points for dead stock management, companies may avoid dead stock by tracking inventory levels in real time and predicting demand with inventory management software. Furthermore, they can track the success of each SKU (stock keeping unit) to discover which products sell well and which do not. As a result, it might take action to improve sales or phase out products that are on the verge of becoming obsolete.

Ensure products are of high quality

As quality is the primary factor in dead stock, you should always ensure that the product you are selling is of the highest quality. Therefore, if customers are not satisfied with the quality of your product, they will immediately stop purchasing it, which will lead to a poor sale. Maintain a close eye on quality control procedures to guarantee that neither the raw materials you use nor the goods you deliver to customers contain any flaws.

Discount it

People are drawn to the word “discount” whenever they see or hear it. As a result, whenever you have any dead stock, you should host a clearance sale and sell your dead stock at a significant discount from its original price. This will draw customers to buy the dead stock, as well as those who liked your products but were unable to buy them due to the price. You can also do this at the end of each month to avoid dead stock.

Donate it

The last and most important step is to donate your dead stock to a cause or charity if you are unable to decide what to do with it. Since there are many charities that work around the world to meet the basic needs of people, doing so will be a good decision, and they will be happy to accept your stock. Additionally, pick a charity that fits your stock category and donate to it so that you can cheer up someone in need.


On this blog, you’ve read a few things about dead stock and discovered its causes, effects, and ways to avoid them. In short, dead stock inventory is an item or stock that a company has held for a long time and is unlikely to sell. Companies may give discounts, engage in a variety of activities to get rid of it, combine it with more profitable products, or use a number of other techniques.

Shivit provides ERP (Enterprise Resource Planning) systems that can forecast customer demand, prevent dead stock and dead inventory, automate order processing, and analyze sales data. As a result, you can avoid overstocking low-demand items and change inventory levels as necessary. In order to increase sales and decrease losses, we strive to offer our clients the best inventory control measures.

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