Excess and Obsolescence

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What is E&O

Excess Stock is a term used in inventory management, and is often called a number of different things; overstock, stock surplus, excessive stock, or excess inventory.


Source - easystock.com


Obsolete inventory is a term that refers to inventory that is at the end of its product life cycle. This inventory has not been sold or used for a long period of time and is not expected to be sold in the future. This type of inventory has to be written down and can cause large losses for a company.


Source - investopedia.com

Customer

  • Cornelius Global
  • 50+ locations (factory + DCs)
  • 350m GBP turnover
  • 60m GBP inventory

Situation

  • End of year E&O stock at 9m GBP
  • New product introduction process contributing to E&O
  • Planning process contributing to E&O

Task

  • Understand the global E&O drivers
  • Implement a robust process to reduce the current year E&O provision
  • Reduce the following year E&O by 50%

Actions

  • Setup & Led a task force to sell E&O inventory globally
  • Introduced Sales & Operation Planning to prevent future E&O
  • Updated the New Product Introductory process to accommodate the support the product life cycle (phasing in of new products and the phasing out of old products)

Results

  • 2.6m GBP generated in cash
  • 1.2m GBP profit released back to the business
  • Subsequent E&O reduced by 50%

Awards & Memberships

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