EXCESS INVENTORY AND DISPOSAL
A. Introduction
Inventory is the net result of demand plans, planning parameters and supply plans flowing into the inventory management process and shipments going out the bottom.
What is Excess Inventory? Excess Stock/Inventory is defined as any quantity of inventory either held or on order, which exceeds known or anticipated forward demand to such a degree that disposal action should be considered. (2)
B. Causes Of Excess Inventory:
The path to high quality results is not a secret or magic and it works every time -- set expectations, measure results, find root causes when expectations are not met, Pareto them and then take corrective action. Apply these steps to the inventory management process and the "quality" improves every time. (1)
“There are multiple drivers that cause excess inventory problems, and this cycle had different issues. For example, in the past, fear of a production line being shut down because of lack of inventory caused managers to keep excess inventory in warehouses and double and triple order strategic parts in periods of higher demand. Just-in-time delivery schedules, in-plant stores, and other innovative practices have reduced those fears and inventory stockpiling has been minimized.” Tom Brunell (3)
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