Definition
Dead stock (also called obsolete inventory or slow-moving inventory) is inventory that has not sold within a defined period — typically 12 months — and has little prospect of future sale. It occupies warehouse space, consumes carrying cost, and ties up capital that could be deployed to productive inventory. Dead stock is distinct from slow-moving inventory: slow-movers still sell, just infrequently. Dead stock has essentially zero velocity. Common causes include forecast errors on new product introductions, product line discontinuations, customer attrition, and over-buying to capture volume discounts. Industry benchmarks show 8–12% of the average SMB distributor's SKU catalog is dead or near-dead.
Why It Matters
Dead stock is the most expensive mistake in inventory management because the cost is hidden — it shows as an asset on the balance sheet until written off. At a 25% carrying rate, $200,000 of dead stock costs $50,000 per year to hold before any write-down. Identifying and liquidating dead stock aggressively is typically the fastest path to working capital improvement. Dead Stock Calculator →
Frequently Asked Questions
How do you identify dead stock?
Identify dead stock by filtering your inventory for items with zero sales velocity over 12 months. Refine by excluding seasonal items, items on approved long-term hold, and service parts with defined replacement cycles. The remainder is dead or near-dead inventory requiring disposition.
What is the difference between dead stock and slow-moving inventory?
Slow-moving inventory has velocity — it sells, just infrequently (e.g., once every 6 months). Dead stock has essentially zero velocity and no realistic near-term demand. The cutoff varies by industry: electronics may classify 90-day non-movers as dead; industrial parts may use 18 months.
How do you liquidate dead stock?
Dead stock disposition options in order of recovery rate: (1) return to supplier if contractually possible, (2) redistribute to higher-demand branches or markets, (3) sell at discount to closeout buyers or liquidators, (4) donate for tax benefit, (5) write off and dispose. Each step down recovers less value.