How to Manage Inventory When Products Reach the Decline Stage

by Louise Balle

When products reach the decline stage they are either declining in demand or in some cases declining in quality. For instance, milk and other perishable food reach their decline stage very quickly compared to other more durable products. When discussing the product life cycle, the decline stage is when sales start to decrease or level off. Either way, the items may begin to lose value and become a burden to the company. For this reason it is important for inventory personnel to do what's necessary to manage the inventory when it's at or approaching its decline stage.

Maintain a record of your inventory levels in a software program and update the information frequently. For larger operations, a bar coding system is most efficient (for both sales and tracking inventory in the warehouse) to gauge which items are moving and which are starting to just take up space in the warehouse. Review and run reports daily or weekly depending on how quickly you estimate inventory changes. Proper inventory software helps ensure that you always have an idea of trends with declining inventory.

Keep an updated list of items that have reached the decline stage based on your research and make it available to other departments at the business who may need them. Sometimes one of the most efficient ways to handle this situation is to transfer the stock for use internally within the firm, if at all possible.

Set a specific deadline for turning over inventory that significantly declines in quality as it ages, such as foods. For instance, allow 30 days to turnover or you will start looking to aggressively unload the items. Use your historical data regarding the movement of inventory to make this decision regarding the timeline. Options for unloading aged inventory are to try to sell it off to discount stores or mark it down and put it on clearance. Follow the guidelines you've set here consistently and adjust them as needed.

Coordinate with your company's marketing department to organize an immediate push of the items that are reaching this point of passing the product maturity stage. For instance, you can offer deep discounts or sales promotions (buy-one-get-one-free) to try to unload the inventory quickly. Also, the sales unit might be able to offer special incentives to sales people if you maintain constant communication with that department.

Contact your supplier (or the purchasing department) to slow or stop orders of the product if it is in its decline stage. If you decide to continue ordering the product for the time being, look at the previous month's sales levels and order that amount or less. You must continuously tweak your orders to balance sales demand with inventory.

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