Survey

In spite of high inflation some cost savings were obtained. How much net cost changes in the last 6-12 months did you obtain over or under the budget?

More than 10% under.
1 to 10% under.
No change.
1% to 5% over,
6% or more over.

Buyers or purchasing managers are sometimes given the assignment of disposing of surplus or obsolete inv..." />

How To Dispose Of Surplus Or Obsolete Inventory

Date: 08/01/2013

Buyers or purchasing managers are sometimes given the assignment of disposing of surplus or obsolete inventory. This is not always an easy task, especially if the goods are worn or in bad condition.

If the material is like new and recently purchased it is often possible to return to the supplier for either full or part credit. If the supplier that sold the goods has gone out of business, a competitor may offer to buy the goods for a fraction of the original purchase price. Sometimes the supplier can sell the goods to another customer who is happy to get a bargain.

Buyers may wish to contact their company’s competitors directly to offer the goods. This approach should probably get the approval by marketing or senior management. There are also websites specializing in disposal of obsolete or surplus material.

Machinery, equipment, and furniture may be sold to used equipment companies. Surplus inventory and old equipment may be offered to employees at a bargain price.

You may find it helpful to advertise in newspapers and trade magazine for products for sale that have wide appeal, but make sure you estimate the potential for revenue compared with the advertising cost involved. You may get zero results, but still need to pay for the advertising.

Make sure you describe the product fully and in detail when you advertise or contact potential buyers. Consider accepting a "best offer" rather than giving a firm price.

Probably your least favorable alternative is to sell the product for scrap value. Your accounting department may object to this choice if the equipment or goods are still carried on the books for much more than the market or scrap value. Unfortunately the accountants and managers must be realistic and be willing to take the loss.

Keeping inventory or old equipment indefinitely is also a cost. It takes up valuable space and the goods deteriorate further.