Why Excess and Obsolete Inventories?
Thresholds of Opportunities! Before exploring an improved process for managing EOL Slow Moving and Obsolete (SLOBS inventories), let us explore the question: why are excess inventories generated? The ideal goal is to determine strategies that result in no SLOBS. However, excess inventories in and of themselves are not bad when considering strategic business initiatives, such as new product introductions with possible surges in sales. Seasonality is a major contributing factor for consumer electronics products. Many firms are trying to build to order or build to demand on a short term basis; however, most products are still made to stock or made for postponed modification for sale. Economic inventory lot sizes must be coordinated to overall Product Lifecycle (PLC) profitability. The trick is to do good forecasting over the PLC, but forecasting is difficult when trying to factor in forces and factors that can occur and 70% forecast accuracy stubbornly remains the norm for high tech manuf
