Write down or dispose of obsolete stock
When it may fit: Items have no future use.
Evidence needed: Usage and engineering status.
Trade-off: Write-downs reduce profit now.
Manufacturing Intelligence Brief
How to Identify Inventory That Warrants a Closer Review
In a large inventory a few items hold much of the risk: slow movers, obsolete parts and items with unstable prices. A ranking finds them.
1. The business problem
Out of thousands of items, which should we look at first?
Reviewing every inventory item is not practical. A screen that ranks items by value, usage and age shows where the money and the risk are.
A well-built screen also catches the opposite risk: fast-moving critical items that are running low.
2. What the evidence can reveal
An inventory screen flags items on several tests:
- Calculated Value: items with the largest dollars on hand.
- Calculated Usage: days of supply at current consumption, and time since last use.
- Calculated Price or cost changes that affect valuation.
- Information gap Product changes, engineering changes and customer demand, which can make an item obsolete.
Items that are large, slow and old are the strongest candidates for write-down or disposal.
3. Investigate the problem
The synthetic plant has no item-level inventory data. Calculated It does show where inventory risk would concentrate. Custom Orders units grew 35.0% and direct costs grew 78.9%, so specialized materials for those orders are a natural place to look. Sensor Pack grew units 17.5%, the fastest of the standard lines, so its materials may be the ones at risk of shortage.
Illustrative A simple screening illustration, with invented numbers: an item with $80,000 on hand and annual use of $20,000 has 4 years of supply, much more than any plausible lead time. An item with $5,000 on hand and annual use of $60,000 has about 30 days of supply, and may need protection. A table ranked by days of supply puts the first at the top for review and the second on a watch list.
Hypothesis Both ends of the distribution matter, so a review should cover too much and too little. Information gap Item balances, usage and last-use dates are needed to run the screen. The plant’s 5.7% scrap share of production cost is also a reminder that scrap and obsolete stock can overlap: material bought for a product that has changed becomes excess.
4. Explore the interactive experience
Investigate it yourself.
Manufacturing Performance Dashboard: a product-line dashboard with downtime and scrap, a scenario simulator for volume, price, materials and scrap, evidence-linked answers from APIS, and a sample brief, all on synthetic data.
The experience below is built on a synthetic manufacturer, “Demo Components Inc.” It has no inventory, supplier or material-usage records, so it is used to show the production and cost side of the picture. Nothing in it is real.
- In the product table, select each product in turn and compare its units now and before. Which products might have the most volatile material needs?
- Select Custom Orders. What would you want to know about its materials?
- Ask APIS which products warrant a closer review.
5. Evaluate possible solutions
A review leads to disposal, protection or better ordering.
6. What leadership should do next
Questions to answer
- Which items are large and slow?
- Which are old with no demand?
- Which are running low?
- What are the options?
Data to gather
- Balances and values by item
- Usage history
- Lead times
- Engineering changes
Steps to take
- Rank by days of supply.
- Review the top and bottom.
- Decide for each.
- Repeat quarterly.
7. Engage Two Pillars
Identify Opportunities Across Production, Costs, and Capacity
Two Pillars can help manufacturers investigate production performance, cost structure, inventory and capital investment decisions using your own plant data. A good first step is an inventory screening report that ranks items by value, days of supply and age.
Sources and data notes
- The organization, its figures, and every number in this article and its interactive experience are synthetic and illustrative. They are not real data, a benchmark, or a forecast.
- Reviewed October 2026. This article describes an approach to investigation. It does not replace review by qualified professionals.