Inventory & cash
Stockouts and dead stock are the same problem
5 min read
It looks like two problems. The fast seller runs out mid-week and the sale goes to a competitor. Meanwhile the pallets of the slow line sit at the back of the depot, aging toward expiry. But it is really one problem: your cash is in the wrong stock.
Both symptoms come from not knowing what is moving
Reordering from habit rather than from what is actually selling means fast movers are under-ordered and slow movers are over-ordered. Nobody flags that a line is trending toward expiry while there is still time to promote it, or that a customer has quietly stopped ordering a SKU they used to take every week.
The result is the worst of both worlds: lost sales on the lines customers want, and working capital trapped in the lines they do not. At distribution margins, the trapped cash alone can exceed the profit on a whole month of trading.
Moving cash to the right stock
The shift is from counting stock to watching how it moves: sell-out rates by SKU, cover in days rather than units, and early warning on anything trending toward expiry or silence. First-expiry-first-out staging ensures that what sells is the stock that would otherwise be written off.
When reorder signals come from real movement, the buying decision changes. Capital shifts from the pallets that are aging to the lines that are actually paying for themselves, without a shilling of extra investment.
What changes for the business
Fewer stockouts on the lines that drive revenue, fewer write-offs on the lines that do not, and a depot that holds less total stock for the same service level. The same working capital buys more sales simply by sitting in the right place.
Common questions
- How do stockouts and dead stock connect?
- Both come from cash being in the wrong stock. Reordering without real movement data under-buys fast sellers and over-buys slow ones, so you lose the sale at the front and tie up capital at the back at the same time.
- Can this be fixed without buying more inventory?
- Yes. Watching sell-out rates, stock cover in days and expiry trends moves existing capital from slow lines to fast ones. Most distributors free up cash and lift availability without any additional investment in stock.
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