Strategies for Reducing Excess and Obsolete Inventory

This paper provides an overview and list of key reasons for accumulating stagnant inventory, based on research across literatures and in companies. Focusing on the metal, wood, process and pulp and paper industries, research and assessment of the state of obsolete inventory in companies in Bosnia and Herzegovina was carried out. Overview of obsolete inventory in Bosnia and Herzegovina to companies was done through an interwiev based on the questionnaire. The goal of the research was to find the answers: How many companies use software as support for ordering and inventory management? Do companies have criteria for classifying obsolete inventry? How often do companies check and analyze obsolete Inventory. Do they have clearly set KPIs regarding obsolete inventory? What is the allowed participation of obsolete stocks in the total stocks? Etc. In the second part of the paper, the case study is shown. For one production company from the cardboard and cardboard packaging industry, a system was developed for the prevention of excess and obsolete inventory, identification and qualification of obsolete stocks, a strategy for dealing with obsolete inventory was defined and an evaluation of the effect of the implemented strategy was made. Developed inventory management policy and strategies to prevent obsolete inventory were resulted in a 50% reduction in obsolete inventory within the first 40 weeks of project initiation.