Inventory Optimisation: Find What Is Not Moving
Every business with stock has some of it sitting still. Inventory optimisation is finding out how much, what it is costing you, and what to do about it.
What is inventory optimisation?
Inventory optimisation is the ongoing work of holding the right amount of stock - not too little, so sales are not lost, and not too much, so cash is not sitting on a shelf doing nothing.
In practice, for most small businesses, it mostly means one thing: finding the products that have stopped selling before another quarter goes by.
Dead stock costs more than it looks
Stock that has not moved in months is not a neutral asset sitting on the balance sheet. It is cash you have already spent, and every month it stays there is a month that cash could have bought something that actually sells. It also has a habit of hiding: a total stock value figure does not tell you which products make it up, so a genuinely healthy-looking number can have a real problem buried inside it.
How to identify slow-moving stock
Two figures do most of the work. Days since last sale flags anything that has gone quiet, with a threshold that depends on the business - a fortnight of nothing means one thing in a corner shop and another in a warehouse full of spares. Stock turnover - how many times a year you sell through what you hold - shows the same problem from the other direction: a low number means cash is sitting rather than moving. The inventory turnover calculator works out both.
Turning insight into action
Finding the slow stock is the easy half. What to actually do about it is a short, honest list: discount it, bundle it with something that does sell, return it to the supplier if that is still possible, or write it off and stop paying rent on the shelf space. None of those choices gets easier by waiting another quarter.
Optimise lists exactly what has stopped moving and how much money is in it, worked out from movements already recorded - nothing new to type in, and it says nothing it cannot back up from your own sales history.
Inventory optimisation vs inventory management
Inventory management is the whole job: knowing what you have, where it is, and what to buy next. Inventory optimisation is the narrower, ongoing half of that - making sure what you are already holding is working for you, rather than just being tracked accurately. A system can tell you precisely how much dead stock you have and still leave you no better off if nobody looks at the number.
Why dead stock is easy to miss
A total stock value figure hides exactly the problem it should reveal. Fifty products doing well and five doing badly can add up to a stock value that looks perfectly healthy, because the five are a small enough share of the total to disappear inside it. The only way to find them is to look at products individually against how long since each one sold, not at the total - which is why a figure that looks fine on Overview can still be sitting on a real problem underneath.
Slow-moving stock is a warning, not yet a loss
The distinction matters because the response is different. Dead stock - nothing sold in the window that counts for your business - is a decision to make now: discount it, bundle it, return it or write it off. Slow-moving stock, still selling but at a declining rate, is a warning to act on before it becomes the first kind: a smaller reorder next time, a look at whether the price or the placement is doing it any favours, or simply watching it for another month rather than reordering out of habit.
What "not moving" does not tell you
A product that has not sold in ninety days is not automatically a mistake. Something bought to fulfil one large order, a spare part kept for a customer who buys rarely but relies on it being there, or genuinely seasonal stock resting between seasons can all sit still for good reasons. The figure is a prompt to look, not a verdict - the business context that explains a quiet product is something only a person looking at it knows, not something a screen can infer from movements alone.
How often to check for stock that has stopped moving
Monthly is enough for most small businesses - often enough that a slow month gets noticed before it becomes a slow year, not so often that the same handful of always-slow products get flagged every time with nothing new to say about them. Optimise lets the window move with the check: thirty days for a fast-moving shop, a year for something that turns over slowly by nature.
Optimisation is not the same as discounting everything
Not every slow product should be discounted, and discounting something that will sell eventually, just at a slower rate, gives away margin for nothing. The window matters here too: a product that turns over once a year by its nature is not underperforming at eleven months, and treating every ninety-day gap the same way punishes exactly the stock that was never meant to move quickly.
See what has stopped moving, without a spreadsheet
Free up to 50 products, then A$9 a month. No card to start.
Start free, no cardFrequently asked questions
What counts as dead stock?
Stock that has not sold within a window that makes sense for the business - commonly ninety days for a small retailer, though a shorter or longer window can be more honest depending on how fast the business normally sells through things.
How much dead stock is normal?
There is no universal figure, but a rough rule of thumb worth checking against your own is that more than 15% of stock value sitting unsold for months is worth a proper look, not a shrug.
Is high inventory turnover always good?
No. Pushed too far, high turnover can mean you keep running out of things, and a lost sale costs more than holding the stock would have - it just does not show up in the turnover figure itself.
What should I do with dead stock once I find it?
Decide, rather than let it decide by sitting there: discount it, bundle it, return it if the supplier will take it, or write it off. How a write-off is treated is a question for your accountant, and all four beat storing it for another year.
Does inventory optimisation apply to a small business, or only a warehouse?
It applies wherever money has been spent on stock, which is every business that holds any. Fifty products in a single shop can hide a slow mover just as easily as five thousand across a warehouse can - the only difference is how much cash is tied up in it, not whether the problem exists.