obsolete inventory

The storeroom is expected to identify and remove obsolete materials on a regular basis. This does several things for the storeroom. One, it adds capacity and availability to store more parts correctly and reduces the over-crowding in the storeroom which can lead to damaged and lost inventory. Two, it reduces the chances that obsolete parts are picked and installed during an unplanned work activity causing equipment failure. Three, it helps to rotate inventory properly so older inventory is picked first to avoid exceeding the expected shelf life of the item. Finally, it is a recognized process to continually monitor the parts in the inventory to ensure they will provide the expected service life when installed.

The storeroom should have a monthly budget to write off obsolete items and a disposal process to scrap, recycle, or otherwise dispose of these items. Some items that become obsolete in your plant might be a needed asset at another operation, or maybe an inventory liquidator has a customer that is in immediate need of a motor. Liquidators are usually reluctant to buy inventory if they don’t have a customer looking for and ready to buy that particular item. Very few liquidators have a warehouse to hold inventory to keep their overhead down and broker a quick profit. One caution on using liquidators, some of the inventory items have legal liabilities that are attached and if there is a problem that relates to the item, your company could be liable for legal action. For this reason, many businesses do not allow material to leave the plant site unless it is going to a recycle or scrap dealer. As stated earlier, it can be very costly to, in many ways, maintain obsolete items in your MRO inventory.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.