What is Inventory Ageing?
This measures the amount of time inventory sits in a warehouse before being sold.
How to calculate Inventory Ageing?
Inventory Ageing = Date of Inventory Disposal - Date of Inventory Acquisition
What is the business impact of Inventory Ageing?
High inventory ageing can indicate low demand, overstocking, or inefficient warehousing operations.
Industry benchmark for Inventory Ageing
A good inventory age typically falls between 60 and 90 days from the receipt date.
How to improve Inventory Ageing?
- Improve demand forecasting to reduce overstocking.
- Implement a Warehouse Management System (WMS) that supports FIFO or FEFO (First Expired, First Out) methodologies.
- Use predictive analytics to identify slow-moving items and adjust sourcing accordingly.
- Integrate your warehouse system with sales and marketing platforms to plan promotions for slow-moving items.