Obsolete inventory refers to products which are no longer valuable and have been kept by a company long enough for it to have seriously declined in value. When a product is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry, it is then obsolete. With an inventory reduction, you can free up space and rid yourself of these products, allowing newer, more valuable products to take their place.
Here are some of the reasons why products become obsolete:
- Advances in technology make the product unusable
- A misjudgment of the demand for those items
- Market competitors may have offered a better version of the product
- The product’s price might have been too high
Overstocking a certain item can also make that item become obsolete. If a product is sitting unsold in a warehouse too long, it may be time for an inventory reduction. A purchasing manager may overestimate the demand for the item in a certain market also causing the product to become obsolete.
Computers, cell phones, tablets and other telecommunications or electronic items can become obsolete if they’ve been replaced by a newer model, or discontinued entirely. These expensive items are most often sitting in a warehouse somewhere, not being sold and costing the company thousands or millions of dollars.
What exactly happens to these unused, unsold items? They’re able to be sold or auctioned off through a reseller, or they may be disposed of entirely in an environmentally friendly way. There are several third-party companies who will handle an inventory reduction and buy surplus materials or products.
AECI is a supply and material management company who manages and sells surplus electronic component equipment, offers telecom solutions, and semiconductor supply solutions. We can help your company with an inventory reduction or inventory disposition. Contact us today to learn more.