In our previous blogs, we looked at the importance of Identifying Dead Stock and went through a few strategies we could use to clear the Dead Stock identified.
Having the list ready for action is one mile stone completed, however execution is the key part of this exercise.
If this sheet is simply passed on to one of your staff members to take action, chances are this will be the last on their list of priorities.
How can you get your staff to act on the Dead Stock List?
The simplest way is to tie this to a KPI to encourage a positive behaviour in your staff.
Each warehouse and retail store will have an average stock value to adhere to. Use this value as the base and identify the current dead stock as a percentage of this value.
The next step is to set a Target Dead Stock level. It should be a number that is achievable so that your staff member or team strives hard to reach the goal.
The set goal could be tied to an Incentive. This can be a quarterly, half yearly or yearly one. Depending on the time frame, the goal and the incentive can be selected. For example, if it is a monthly goal, it could be as simple as a lunch for the whole team while a yearly goal could be tied to a performance bonus.
The final stage is to send a report to all employees on a regular basis. The report could be in the form of a simple spreadsheet with the following fields:
1.Store name
2.Average Stock Value
3.Current Dead Stock Level
4.Target Dead Stock Level
5.Difference between current and target
This report will give your staff a clear idea on where their warehouse/store stands against the set target. If you have multiple locations, staff will then be able to compare their store's performance against other stores. This could also encourage a healthy competition amongst the stores.
Key point to note when calculating the next dead stock sheet
When a dead stock is sold, a sale will be recorded in the system and this SKU will not appear in the dead stock list the following month. A new custom data field can be created in the Location stock file in your system which could take values of 1 and 0 to indicate whether the stock is dead or not. Else, you could match the new stock file and the old dead stock file to arrive at this list.
It takes anywhere between 3 to 12 months to tailor and systematise this process for your business. Thus, constant reminder about the importance of managing the dead stock levels for the well being of the overall business and consistent reporting is vital.
