Spare Parts Know How

Spare Parts Inventory Management Training

  • Log-In
  • Individual Training
    • ‘Must Know’ Training
    • Advanced Course
    • Pro Level Membership
    • Masterclass Webinar
    • RMIC Certification
  • Team Training
    • Team Boot Camp
    • Elite Teams
    • In-Person Workshop
  • Open Archive
  • Other Resources
    • Books
    • Pro Level Library
    • Training Academy
    • Software and Services
      • Inventory Optimization Decision Support
      • Materials Data Management
  • Contact
  • About
    • Clients
    • Testimonials
    • FAQs
    • Phillip Slater

Managing Slow Moving Inventory

September 28 spkhadmin

Is Slow Moving Inventory Really An Easy Target for Inventory Reduction?

slow moving inventory

Inventory that is slow moving is often seen as an easy target for people undertaking an inventory review.

Rather than undertake a structured review process (such as the Inventory Cash Release Process) many people will target slow moving inventory as if it is some kind of silver bullet for inventory optimization.

But this just isn’t true.

This is usually based on a belief that the characteristic of being slow moving is proof that the items aren’t really needed. In my view this is mistaken because the items could well be needed, albeit infrequently, but supply issues might mean that they need to be held in stock.


Check Your Definition of Slow Moving


The mistaken view can usually be traced back to the definition that is used for slow moving inventory.

Many companies describe slow moving as being inventory where they have more than, say, 12 months stock on hand but this definition describes the inventory in terms of the quantity held rather than the frequency of movement.

Under this definition an item could have demand every week but be classified as slow moving because for some reason they have more than 12 months stock on hand. While inventory with this profile might very well be a problem (depending upon other factors such as supply limitations), it certainly isn’t ‘slow moving’.

A better approach, in my view, is to define ‘slow moving’ based on the frequency of demand.

Depending upon the way your other inventory is classified this could be as much as a single demand in a few months or it might be having no demand for 12 months. The actual frequency for the definition really does depend upon your circumstance. But the key is to define slow moving in a way that reflects frequency of demand not the quantity on hand.


Another Problem


The other problem with this inventory is that wrong approach is often used for calculating the holding requirements.

By definition there will most likely be very few data points for a calculation and so it is inappropriate to use a Gaussian (or normal) function for calculating the Reorder Point (ROP).

Yet people do this because they rely on their inventory management software for the calculation and this software often doesn’t differentiate inventory types. (I find this hard to believe but, yes, it is actually true.)

A better approach is to use a Poisson function for slow moving inventory. This approach helps you determine the probability of a stock out, over the period of restocking, depending upon the number that you hold at the ROP. This is conceptually different to the Gaussian function and is far more reliable for slow moving inventory.

Here are a few things that you can do if you are concerned about slow moving inventory:

  • Check your company’s definition of slow moving. Does it reflect quantity or frequency? Is the time frame suitable for your situation?
  • Check how the calculation for the ROP is calculated.
  • Reassess your holdings based on the new definition and approach.
  • Institute new system flags to identify items that have had no movement for a period of time so that you can determine if they are slow moving or have become obsolete.

These actions will help you to better manage your slow moving inventory but don’t expect a slow moving inventory review to solve your inventory problems – it won’t. It is just one tool in a complete approach and needs to be applied as part of a structured process.

 
 


You may also be interested in our Spare Parts Management Resource Library.

 
Try also these articles:

The Right Spare Parts Metric – Accuracy Vs Precision.

The Spare Parts Storeroom – More Than Just Transactions
 


 
Author: Phillip Slater
 
 

Filed Under: Storeroom Management

Substantial Global Community

Trusted by:
+20,000 professionals in
+130 countries
See a sample of companies HERE

Spare Parts Management Masterclass

Watch this on-demand webinar to discover the 8 strategies that will help you achieve your spare parts inventory management goals
Read more...

‘Must Know’ Training

Our ‘Must Know’ training course teaches the absolute ‘must know’ information, tools, techniques required for effective spare parts management.

Read more...

Advanced Spare Parts Management Course

For those who need to go deeper and broader.

Ideal if your goal is to update your company’s approach and systems for spare parts management.
Read more...

Pro Level Membership

With access to all our key resources, a Pro Level membership will equip you with the know-how and skills to become a ‘thought leader’ in spare parts inventory management.
Read more...

Online Boot Camp

A live, online, interactive, team-based delivery of our Basic Training course designed to provide your team with a common understanding of the basics of spare parts inventory management. Read more...

Software and Services

At SparePartsKnowHow.com we can help with more than just spare parts management training.

We also have access to software and services that are developed to help with spare parts inventory management.
Read more...

Latest Blog Posts

  • Systems Over Goals: A Smarter Way to Manage Spare Parts Inventory
  • Spare Parts Management Training: The Power of Curiosity and Commitment
  • Spare Parts Inventory Management: Small Wins and Compromises
  • Spare Parts Inventory Management Training: Letting Go of Ego
  • Best Practice Spare Parts Management
  • Email
  • LinkedIn
  • YouTube
Copyright © 2025 IPIAIGHT PTY LTD.