Purchase & store glossary
Dead Stock Meaning: Causes & How to Reduce It
Dead stock, in short
Dead stock is inventory that has not been issued or used for a long period, commonly 12 months or more, and is unlikely to be used soon. Slow-moving stock is used, but rarely. Both tie up cash, take store space and often end up as scrap.
Also called: Non-moving stock, Obsolete stock, Slow-moving stock
Walk into most factory stores and you'll find racks of material nobody has touched in a year: spares for a machine that was replaced, a bulk lot bought "because the rate was good", the wrong size ordered twice. That is dead stock.
How to identify it
A common classification by last issue date:
- Fast-moving: issued in the last 3 months
- Slow-moving: last issued 3 to 12 months ago
- Dead or non-moving: not issued for 12 months or more
Pick the cut-offs that fit your plant. Critical insurance spares for a kiln or a rolling mill stand may legitimately sit for years, so mark those separately rather than counting them as dead.
What causes it
- No maximum level, so buyers overorder (min-max inventory)
- Duplicate item codes: the same bearing entered three ways, so stock exists but nobody finds it
- Machines replaced without clearing their spares
- Bulk buying for a discount without checking usage
- Indents raised without checking stock first
Example
A store holds ₹1.2 crore of stock. A report by last issue date shows ₹18 lakh has not moved in 12 months. Even recovering half of that by using it, returning it or selling it frees ₹9 lakh of working capital. (Illustrative figures.)
How to reduce it
- Run a dead and slow-moving stock report every month.
- Clean the item master so duplicates are merged.
- Check stock before approving any new indent for the same item.
- Offer usable items to sister plants or divisions.
- Return to vendor where possible, or sell as scrap.
- Set maximum levels so it doesn't build up again.
How IndustryPrime handles it
Dead stock and slow-moving stock reports are included, division by division. Stock transfer between stores and divisions of the same company is built in, so surplus can move where it's needed. Duplicate item names hide dead stock too, and our item master cleaning service finds them. See dead stock management.