This method of identifying slow-moving inventory can be trickier, though, because there's not a convenient hard cutoff. If a company knows roughly how many units it should be selling each week or month, it can look at the rate of sales for a product instead of time spent in inventory, which will give it an earlier heads up than inventory metrics. But a business selling baked goods or dairy products certainly can't keep items on shelves for 80 days and expect them to remain viable for sale.Įven some companies whose products don't spoil can't wait 90 days to determine whether inventory is slow-moving or not. Common definitions say things like, “inventory that's been in stock for over X days” where X is usually 90 or 120 or 180. That may sound too vague to be helpful, but truth is that "slow-moving" is going to be defined differently for different industries, companies, and even for different products within the same company.
Slow-moving inventory is inventory that's taking a long time to sell. Knowing how to identify slow-moving products in your business, find the underlying cause and address the problem is an important skill set to have when selling physical products. The challenge is knowing what to do about it, since the reasons sales may slow for a particular product can vary significantly - and the solution must match the cause. Slow-moving inventory is a problem many businesses deal with from time to time.
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