Getting Serious About Dealing with Surplus & Obsolete Inventory-Presentation

Presentation

Pdf Summary

The "Getting Serious About Dealing With Surplus & Obsolescence" AED Webinar discussed the negative impact of obsolescence on profitability, cash flow, and customer satisfaction if not properly managed. Obsolescence refers to inventory that has not sold within a specific time period and is a key performance indicator if it accounts for less than 10% of total inventory. There are various reasons for obsolescence, such as underutilization of parts returns, not heeding future non-returnable notifications, and changing suppliers or rental fleets without considering parts needs. Obsolete inventory can lead to increased costs and reduced profitability and cash flow. For example, if the obsolescence is $100,000, the annual cost on obsolete inventory would be $7,000. To prevent or minimize obsolescence, it is important to analyze and improve processes, such as vendor returns policies, ordering parameters, and dealership business system reports. It is also recommended to consider changes in wholegoods vendors or rental fleet, and to understand the lifecycle of parts and anticipate future needs. Obsolete inventory can be reduced through returnable parts utilizing vendor returns, special returns, or leveraging wholegoods orders. Non-returnable parts can be dealt with through identification, isolation, cross-over options, marketing plans, liquidation, or scrap. Finally, it is emphasized that minimizing obsolescence not only reduces expenses and frees up cash, but also provides the opportunity for increased sales and customer satisfaction. Being proactive, analyzing reports and processes, devising a game plan, and overcoming obsolescence are essential steps to effectively manage inventory.

Keywords

obsolescence

profitability

cash flow

customer satisfaction

inventory management

key performance indicator

parts returns

vendor returns policies

wholegoods vendors

non-returnable parts