Why so many people end up with obsolete inventory?

If you want to find out why so many people have to deal with all the unwanted stuff, aka obsolete inventory, it would be wise to begin by defining what the term means.

Obsolete inventory is a term that refers to everything you purchased for sale, but those goods are no longer sellable.

Why people end up with obsolete inventory?

Some people believe that no matter what the inventory is, it can never go to waste. Moreover, everything can be sold sooner or later, all it takes is a little bit of patience. However, this is not the case with obsolete inventory. If your goods have reached the point where they are no longer available to sell, this means that this stock is dead. Also, if you can't sell it now, you should not expect to sell it in the future. It is also worth pointing out that these goods can be extremely costly and quite detrimental to the business.

If you want to avoid dealing with unsellable stuff, pay attention to these five reasons that cause the problem:

•    Inability to see the demand. If you cannot forecast how the market will be let's say a couple of months from now, there is a high possibility that you end up with unsold goods. As we live in the age of technologies, everything moves fast and predicting the future can be quite difficult. Before investing money, make sure that you researched market enough to determine what your potential customers will need.
 

•    Poor quality of the product. If you end up making something that does not meet the requirements of your customers, expect to suffer losses. The word-of-mouth travels fast, and your reputation will decrease, causing even more damage. Getting back on your feet will be difficult, so before you release a product, make sure it has all the qualities. Otherwise, you will end up with a warehouse full of unwanted stuff.
 

•    Incompetent inventory management. Make sure that you have somebody to keep track of everything that goes in your inventory. If you have a computerized system, that's even better, as it reduces the probability of error.
 

•    Unable to see the time it takes to sell. The situation is a bit similar to the first point. You will need to research the market thoroughly to determine how long it will take for you to sell the goods.
 

•    Forgetting to manage obsolete inventory. You have to face it. Nearly every business has to deal with dead inventory. If you prepare beforehand, that is, make sure that somebody will manage all the unsold items, you will resolve the problem more efficiently.

All in all, obsolete inventory is something that is tough to avoid entirely. It is smart to expect that you will not be able to sell every item. If you prepare beforehand, you just might avoid losses that occur to those who are not prepared.