What are the best inventory analysis software and tools for identifying slow-moving inventory?

1 ABC Analysis

One of the most common and useful inventory analysis methods is ABC analysis. ABC analysis is a way of categorizing your inventory items based on their value and sales frequency. The idea is to divide your inventory into three groups: A, B, and C. A items are the most valuable and fast-moving, B items are moderately valuable and moving, and C items are the least valuable and slow-moving. By applying ABC analysis, you can prioritize your inventory management efforts and allocate your resources accordingly. For example, you can focus on reducing the stock levels and storage costs of C items, while ensuring the availability and quality of A items.

2 Inventory Turnover Ratio

Another key metric that can help you identify slow-moving inventory is the inventory turnover ratio. The inventory turnover ratio is a measure of how many times your inventory is sold and replaced over a given period, usually a year. The higher the ratio, the faster your inventory moves and the more efficient your inventory management is. The lower the ratio, the slower your inventory moves and the more likely you have excess or obsolete stock. To calculate the inventory turnover ratio, you need to divide the cost of goods sold (COGS) by the average inventory value. For example, if your COGS is $100,000 and your average inventory value is $25,000, your inventory turnover ratio is 4. This means you sell and replace your inventory four times a year.

3 Inventory Aging Report

A third tool that can help you identify slow-moving inventory is the inventory aging report. The inventory aging report is a report that shows how long your inventory items have been in stock and how much they are worth. The report can help you spot trends, patterns, and outliers in your inventory movement and value. For instance, you can see which items have been in stock for longer than a certain threshold, such as 90 days or 180 days, and how much they contribute to your total inventory value. You can also see which items have a high risk of becoming obsolete or expired and need to be disposed of or discounted.

4 Inventory Optimization Software

A fourth option that can help you identify and manage slow-moving inventory is to use inventory optimization software. This type of software uses advanced algorithms and data analysis to optimize your inventory levels, ordering, replenishment, and forecasting. It can reduce inventory costs, improve service levels, and increase profitability. Features and benefits include demand forecasting, which helps predict future demand based on historical data and trends; reorder point calculation, which determines the optimal time and quantity to reorder products; inventory classification, which organizes items using ABC analysis or other methods; and an inventory dashboard, which allows you to monitor and visualize inventory performance such as turnover ratio, aging, stockout rate, and value.

5 Inventory Audit

A fifth and final tool that can help you identify slow-moving inventory is to conduct an inventory audit. An inventory audit is a process of verifying the accuracy and quality of your physical inventory and comparing it with your inventory records. An inventory audit can help you identify and correct any discrepancies, errors, or issues in your inventory management, such as miscounts, damages, thefts, or losses. An inventory audit can also help you identify and evaluate your slow-moving inventory and decide what to do with it, such as selling it, donating it, returning it, or scrapping it. An inventory audit can be done manually or with the help of technology, such as barcode scanners, RFID tags, or inventory management software.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?