MRO spare parts inventory are of major importance to industries such as Manufacturing, Metals & Mining, Power & Utilities, Oil & Gas, and Chemicals, where business revolves around labor and performance. To save an organisation from a costly downtime and make sure they’re ready for periodic maintenance or unexpected equipment failure, it is a common strategy to prepare spares beforehand. One may think that this is a good strategy – and it is! – but here’s the dilemma: while this is a smart move, it can also cause a damaging effect on the organisation by gaining excess and dead inventory.
Keeping dead inventory is never good for business. There is no return of investment (ROI), only sales loss and unwanted added costs which can put the whole organisation into financial jeopardy. The common approach to getting rid of it is to dispose them, which isn’t proactive and of no help either. Replace the common approach with better alternatives that can help your organisation gain profit! Here are some tips to consider in getting rid of dead inventory:
Find the source.
The best way to stop recurring non-moving inventory is to search for its possible causes. What’s the reason it got there in the first place? If you can find what’s causing all the dead weight, you can come up with a solution to avoid it from happening again.
Send it back.
Do not hold on to spare parts longer than you have to so that it’s possible to return them back. If not too much time has passed since your purchase and it’s not violating any policy, return it to your supplier. Construct a proposition that creates a winning outcome for both parties so they’d be more attracted to the idea.
Sell it in a discounted price.
Spare parts that have not been used for quite a while are outdated, so selling it in its original price wouldn’t entice customers. To decide how much to mark down, segregate spare parts into categories. For instance, you can base it on its usefulness or maturity. A reduced price can encourage more buyers, giving you more chances of selling it and making profit. Advertise it on niche industrial sites such as Industry Mart and Liquidation rather than generic sites to get a clearer target market. You might not get exactly what you paid for, but at least you’re getting something in return.
Bundle it up.
Eliminate dead inventory swiftly by selling them as a package deal! Use discount strategies such as “buy-one, get-one” and selling spare parts that go together to get rid of it faster. Another trick would be to sell products that are high in demand together with those that have low ones.
Seek for help (and give incentives).
Incentives such as getting a small cut from the sold product or an extra paid leave – whichever reward you prefer and think compliments the situation – can help motivate members of your department to move and sell the products. Liquidating dead inventory doesn’t happen overnight, so having many hands working on making it happen can go a long way.
Owning dead inventory is hard to avoid completely; nonetheless, organisations must carefully weigh and plan when to buy spares to steer clear of extreme build up. Remember: if the piled up spare parts are still in good condition, writing dead inventory off as waste and disposing of them should always be the last resort. Stay pro-active!
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