5 Causes of Inventory Write off

Nuances of writing off the inventory stockpiles are tough.  Too much of inventory tends to make analyst overly optimistic about store’s value. Too little inventory undervalues the store in the eyes of the analyst.  Overall, there are definite reasons which need to be foreseen before we end up writing off the inventory. There are five possible causes for writing off the inventory:

1. Low Visibility: Inventory processes sometimes ignore inventory that lay wasted in warehouses. No one cares and no one has any idea of what to do ahead.
2. Bad Management: Most of the times inventory management team is not given full freedom to implement their decisions on inventories. In the end, to the world, it appears that inventory manager was the main culprit behind all this. Instead, higher authorities were taking decisions uncalled for to bring in the turmoil.
3. Response time: The evaluation of inventories in excess, in stock or dead stock, can certainly lead to a better picture of inventories. A continuous and rigorous evaluation will lead to seamless inventory flow as per demand.
4. Daily Check: One more big reason for piling up of unnecessary inventories is simply because the checking time of inventory levels is done on weekly, monthly, and quarterly or annually at worse. The inventory levels must be checked daily to have an optimal level of inventory.
5. Prediction: Predicting the fast changing trends for better sale and maintaining desired inventory level to fulfil the demand is the need of the hour. Predictive Analytics can salvage the supply chain and inventory management by predicting the required inventory levels.