Systematic Inventory Control and Dead Stock Elimination
Unmanaged manufacturing warehouses accumulate massive excess raw material stocks and unrecorded dead inventory, tying up working capital and cluttering plant floors due to a lack of systematic stock logging and reordering norms.
Picture this
Imagine a grocery store owner who keeps buying boxes of cereal without writing down what is already in the back room. Over time, boxes of old, expired cereal pile up to the ceiling, blocking pathways and hiding usable food behind forgotten trash. By counting every box, throwing away the ruined stock, labeling shelves by brand, and setting a rule to only buy new cereal when stock drops below 10 boxes, the owner frees up space and stops wasting money on duplicate orders.
What the evidence says
Prior to intervention, plants held an average of 4 months of raw material yarn inventory including significant unrecorded dead stock; adopting inventory tracking and norms reduced plant yarn inventory by 21.7% post-treatment without causing material shortages.
- Who
- 18 experimental textile plants across 17 large cotton weaving firms near Mumbai, India.
- How
- Randomized field trial introducing systematic yarn logging, warehouse labeling, stock aging tracking, and minimum/maximum inventory reordering norms.
What to do
Catalog, label, and electronically record all warehouse inventory while establishing explicit minimum reordering thresholds and aging logs to purge dead stock.
From the source
"After cataloging, the firms sold or used up the surplus yarn (by incorporation into new designs), and then introduced restocking norms for future purchases and monitored against these weekly."
541 Management in India QJE.pdf