Reporting slow-moving stock to head office: age bands and proposals

An email from head office asks: "Stock is up by a third on last year at this point, but sales are flat. What is the extra?" The warehouse replies "it is all useful", yet nobody can show which batches are moving and which have not been touched for three years. Slow-moving stock occupies space and money, and may also spoil, expire or become obsolete. To explain it to head office, first define "slow-moving", then use data to separate it.

Define it first

Two measures are commonly used: age (how long the goods have been in stock) and the date of the last issue (how long since they moved). There is no universal number of days; agree it with head office and finance and keep it consistent month after month. For example:

• No issue for over 90 days: watch.
• No issue for over 180 days: slow-moving.
• No issue for over 365 days: seriously slow-moving.

(These periods are only an example; you and head office decide.) Some items are slow by nature and need separate treatment: critical spare parts, seasonal goods, materials reserved for a project, and goods held on consignment. They should still be managed, but by another standard.

Building age bands

Export the stock detail from 1C, Excel or your ERP, with item, quantity, value, receipt date and last issue date. If the system does not keep receipt dates by batch, estimate age on a first-in-first-out assumption and say so in the report.

Then summarise in Excel by age band: 0 to 90 days, 91 to 180, 181 to 365, and over 365.

Suppose total stock is 5 billion UZS:

• 0 to 90 days: 3.2 billion, 64 percent.
• 91 to 180 days: 0.9 billion, 18 percent.
• 181 to 365 days: 0.6 billion, 12 percent.
• Over 365 days: 0.3 billion, 6 percent.

(Illustrative figures.) Add a "last issue date" column and you can see which goods are old but still move, and which arrived recently but never left. Reading both together is far more accurate than either alone.

Sorting and proposing action

Group the slow-moving stock as follows and make a proposal for each group:

• Still needed, just slow: keep, and reduce reorder quantities.
• Can be moved internally: transfer to a warehouse or project that needs it.
• Can be discounted, promoted or returned to the supplier: act early, when the loss of value is small.
• Near expiry or expired: highest priority; the longer the delay, the bigger the loss.
• To be scrapped or provided for: the treatment is for finance and the accountant to decide.
• Book and shelf disagree, unconfirmed: count first to confirm the goods are still there.

For each group, name an owner, a time and the expected effect (shelf space released, cash recovered). The decision belongs to head office and management; what you submit is a proposal with evidence behind it.

Reporting to head office: one page

Head office wants brevity. Put these on one page:

1. Total stock, the value and share of slow-moving stock, compared with the last period.
2. The age band table.
3. The ten largest slow-moving items: name, quantity, value, age and cause.
4. Your proposals, and what you need head office to approve.
5. A note on basis: the definition used, the data date and which items are excluded.

Support each item with data rather than words like "about" or "perhaps".

Once the basis is fixed, do not change it casually, or the monthly figures cannot be compared.

Stopping it building up again

Slow stock usually comes from a few places: over-buying to reach a minimum order quantity, leftovers after a project is cancelled, a wrongly ordered specification, and over-optimistic forecasts. Matching actions:

• Before reordering, look at age and the last year's usage.
• When the minimum order quantity conflicts with real usage, discuss it with purchasing and sales in advance.
• Go through the list of items with no movement for over 180 days at the monthly meeting.
• Manage goods with expiry dates on a first-expired-first-out basis.

In short

Slow-moving stock should be separated first and then dealt with, on a stable basis. UzWarehouse's counts and warehouse audits can verify whether these goods are still in stock and in what condition, and hand the results to your finance team and head office. How they are dealt with remains your decision.