Dead stock is cash in a box. It does not feel like a loss because the boxes are still there, counted, and valued at cost. But every slow item has already taken the money, the shelf space, and the attention that a better seller needed. Most small operations do not have an inventory problem; they have three small habits missing.

Know your real numbers

Three numbers per item explain most of the situation: how many you sold in the last ninety days, how many you hold now, and how long the supplier takes to restock. Everything else, including the fancy forecast, is a refinement of those three.

If you cannot produce those numbers in an afternoon, that is the first problem to fix. A spreadsheet with one row per SKU and a monthly sales figure beats a system nobody updates.

Set reorder points by lead time

A reorder point is the stock level that triggers a new order. It should cover demand during the supplier lead time, plus a small buffer for a late delivery. If you sell ten a week and the supplier takes three weeks, you need thirty plus a buffer before you order again.

Write the calculation in the sheet so anyone can see how the number was reached. Recalculate quarterly, and immediately after any supplier change.

Age your stock every month

Sort the inventory by how long each item has been held. Anything over ninety days needs a decision: discount, bundle, return to supplier, or write off. The decision matters less than making one.

An ageing report is uncomfortable the first time. It is also the only reliable way to see which purchases were a mistake, and to stop repeating them.

Stock that has not moved in a quarter is a decision you have not made yet.

Keep the SKU list honest

Every variant needs its own code, and the code should not change when a price changes. Avoid codes that encode the supplier, the year, and the colour in one string; they break when any of those change. Use a plain sequence and keep descriptive fields separate.

Retire codes rather than reusing them. A reused code makes last year's sales report wrong, and wrong reports lead to wrong buying.

Count what matters

Full stocktakes are expensive and rare. Cycle counting is cheaper: count a small group every week on rotation, focusing on high-value items and items with a history of discrepancies. Fix the cause of each error, whether it is a mis-pick, a return not booked in, or a supplier short-shipment.

Record the count date and the variance. Patterns appear quickly, and most come from process rather than theft.

Decide what to stop buying, and watch the cash

Most catalogues accumulate items nobody would choose again. Each one consumes a purchase decision, a product photo, a listing, and shelf space. Set a rule: an item that sells fewer than a set number of units in two consecutive quarters is discontinued unless there is a clear reason to keep it.

Clear the remaining stock with a bundle rather than a deep discount. Bundling protects the perceived value of the item and moves slow stock alongside something that sells.

Suppliers are part of your inventory system whether you plan for it or not. Ask for a written lead time, confirm the minimum order quantity before you fall in love with a product, and keep a second source for anything that represents a large share of revenue. One supplier with a four-week delay can empty a category for a month.

Perfect inventory records are satisfying but not the point. The point is to keep cash moving: buy what sells, avoid what does not, and know the difference early enough to act. A team with an imperfect sheet and a monthly review will beat a team with perfect data and no review.

Monthly inventory checklist

  • Update sales figures for the last ninety days per SKU.
  • Recalculate reorder points for the twenty highest-value items.
  • Review the ageing report and decide on anything over ninety days.
  • Count one rotation group and log the variance.
  • Check open purchase orders against expected delivery dates.
  • Flag items below reorder point and confirm the order was placed.
  • List one item to discontinue this quarter.

Two hours a month is enough to stop the slow accumulation that makes a warehouse feel full and a bank account feel empty.