Dead Stock Analysis & Inventory Optimization

Dead stock is inventory that hasn't sold in months—or even years. It ties up capital, occupies valuable warehouse space, and depreciates in value over time. For many businesses, dead stock represents thousands of dollars in trapped capital that could be reinvested in faster-moving products.

But identifying dead stock is just the first step. The real challenge is understanding why items aren't selling, predicting future losses, and determining the best strategy to recover value. That's where OrderWeave's inventory optimization comes in.

The 3-Level Analytical Framework

OrderWeave uses a proven analytical framework to transform raw inventory data into actionable business intelligence:

Level 1: Describe — What's happening?

The first step is visibility. OrderWeave queries your ERPNext data to provide a comprehensive view of your inventory health:

• Stock value by category: See exactly how much capital is tied up in each product group
• Days since last movement: Identify items that haven't sold in 90, 180, or 365+ days
• Quantity on hand: Spot overstocked items taking up warehouse space
• Age distribution: Visualize the aging of your inventory across time buckets
• Warehouse allocation: Understand which warehouses have the most dead stock

This descriptive layer answers questions like: "We have $125,000 in dead stock across 45 items" or "30% of our furniture category hasn't moved in 6 months".

Level 2: Diagnose — Why is this happening?

Understanding why items aren't selling is critical for prevention. OrderWeave performs root cause analysis by:

• Categorizing severity: Classify items as DEAD (365+ days), VERY SLOW (180-365 days), or SLOW (90-180 days)
• Comparing to benchmarks: How does an item's turnover compare to its category average?
• Identifying patterns: Are certain suppliers, brands, or product types consistently problematic?
• Seasonal analysis: Is this a seasonal item purchased at the wrong time?
• Price positioning: Are items overpriced compared to market rates?

The diagnostic layer answers: "These 15 items are DEAD (critical priority) because they're overpriced by 30% compared to competitors".

Level 3: Prescribe — What should we do?

The ultimate value of analytics is actionable recommendations. OrderWeave generates specific strategies to recover value from dead stock:

• Discount strategies: Calculate optimal discount percentages to move inventory quickly
• Bundle opportunities: Identify fast-moving items that can be bundled with dead stock
• Clearance campaigns: Generate promotional price lists for seasonal sales events
• Expected revenue: Project how much capital each strategy will recover
• Priority ranking: Sort recommendations by ROI and urgency

"A flash sale with 30% discounts on 15 slow-moving items can recover $35,000 in capital within 2 weeks, compared to losing $45,000 in value over the next 6 months if we do nothing."

Real-World Example

Let's walk through a practical example of OrderWeave's dead stock analysis in action:

Describe: The Problem

A furniture retailer runs OrderWeave's dead stock report and discovers:

• 45 items haven't sold in over 180 days
• Total inventory value: $125,000
• Top category: Outdoor furniture ($48,000)
• Warehouse: 65% is in the main warehouse, occupying premium shelf space

Diagnose: The Root Causes

OrderWeave's diagnostic analysis reveals:

• Seasonality: Outdoor furniture was purchased in October (off-season)
• Overpricing: Items priced 25-30% above market average
• Lack of visibility: Items not listed on the e-commerce site due to sync issues
• Category performance: Outdoor furniture has 3x longer average days to sell than indoor

Prescribe: The Action Plan

OrderWeave generates three recommended strategies:

1. Immediate clearance sale (Priority 1)
   • Apply 30% discount to 15 most critical items
   • Expected recovery: $22,000
   • Timeline: 2 weeks
2. Bundle with fast movers (Priority 2)
   • Create "Outdoor Living Bundle" with popular items
   • Expected recovery: $12,000
   • Timeline: 1 month
3. Pre-summer campaign (Priority 3)
   • Promote remaining items in March-April
   • Apply 15% early-bird discount
   • Expected recovery: $8,000
   • Timeline: 2 months

Total projected recovery: $42,000 out of $48,000 (87.5% recovery rate) versus holding the inventory for another 6 months and risking $18,000 in depreciation and holding costs.

Automated Price List Generation

One of OrderWeave's most powerful features is automated promotional price list generation. Instead of manually updating prices for hundreds of items, you can:

1. Select a source price list (e.g., "Standard Selling")
2. Filter items by tags (e.g., "seasonal", "clearance", "dead-stock")
3. Apply a discount percentage (e.g., 30%)
4. Set validity period (e.g., Black Friday weekend)
5. Click "Generate"

OrderWeave's background workers will:

• Query all items matching your criteria
• Fetch current prices from the source price list
• Calculate discounted prices (30% off = multiply by 0.70)
• Create the new price list in ERPNext
• Bulk insert all item prices
• Sync discounted prices to your WooCommerce/Shopify stores

Result: A promotional campaign that would take hours of manual work is set up in under 60 seconds.

Key Metrics Tracked

OrderWeave's dead stock dashboard provides at-a-glance metrics:

• Active Items: Total number of items in your catalog
• In Stock Items: Items with quantity > 0
• No Location Items: Items not assigned to warehouse locations
• OK Stock Items: Items with healthy turnover (quantity ≥ 5)
• Low Stock Items: Items at risk of stockout (0 < quantity < 5)
• Dead Stock Value: Total capital tied up in non-moving inventory
• Holding Cost per Month: Warehouse rent, insurance, depreciation
• Projected Loss: Value at risk if no action is taken

Advanced Filtering

OrderWeave supports comprehensive filtering to drill down into specific inventory segments:

• Boolean filters: Has room assignment, in stock, low stock, has image
• Category filters: Item group, supplier, brand
• Location filters: Warehouse, room, shelf
• Time filters: Days since last movement
• Search: Full-text search across item code, name, and barcode

These filters make it easy to answer questions like:

• "Show me all outdoor furniture in Warehouse A that hasn't moved in 180 days"
• "Which items from Supplier X are low stock without warehouse locations?"
• "What's the total value of dead stock in the Electronics category?"

The ROI of Dead Stock Optimization

Implementing dead stock analysis delivers immediate, measurable returns:

• Recover trapped capital: Free up cash for better-performing inventory
• Reduce holding costs: Save on warehouse rent, insurance, and labor
• Prevent future deadstock: Learn which products/suppliers to avoid
• Improve cash flow: Convert stagnant inventory into working capital
• Optimize warehouse space: Make room for faster-moving products

Industry data shows that dead stock typically represents 20-30% of total inventory value. A $500,000 inventory likely has $100,000-$150,000 in dead or slow-moving stock.

Conclusion

Dead stock is a silent profit killer. But with the right tools and frameworks, it's also one of the fastest sources of recovered capital in your business.

OrderWeave's dead stock optimization doesn't just tell you what inventory isn't moving—it tells you why, what it's costing you, and exactly what to do about it.

Ready to unlock trapped capital and optimize your inventory? Contact us for a demo or view our pricing.