You have items sitting on your shelves and in your storeroom which have been there for years. This is dead stock. Please note even the best run companies have about 20 to 30% of their inventory as dead stock.
It is easy to dismiss those items as just filling space (which can be useful sometimes) but they cost a lot more than you think:
- warehousing. If you are large enough to have a warehouse, you know the value of each square meter of space. If it is filled with stock you do not sell, you are wasting money.
- cost of money. You have paid for this stock and you may have had to borrow to buy other stock. Which means this dead stock comes with interest…
- shelf space. Your dead stock is taking the shelf space of items which could sell a lot faster. Maybe your dead stock is in prime space in your shop.
- insurance. Your dead stock is still valued and as such you are paying more insurance because of it.
- discount. You may have to discount the stock to get rid of it, which usually means selling it at below cost price.
- admin cost. The more dead stock you have, the more time you spend counting it, moving it, inventoring it, etc… All this equates to a lot of time for no end result.