In inventory management, distinguishing between “obsolete” and “redundant” items is crucial for maintaining efficiency and reducing costs.
Obsolete vs. Redundant Items
Obsolete Items:
Obsolete items are products no longer in demand, often due to advancements or changing preferences. These items remain in stock but do not contribute to operations.
Redundant Items:
Redundant items are surplus to current needs but still usable. Over-ordering, inaccurate forecasting, or schedule changes can cause redundancy.
Managing Obsolete and Redundant Items
Obsolete Items Management:
- Identification: Regularly review inventory for items with no usage in a set period.
- Analysis: Determine why items became obsolete to avoid future issues.
- Disposition: Clear obsolete stock through auctions, recycling, write-offs or negotiate returns or exchanges with suppliers.
Redundant Items Management:
- Audits: Conduct regular audits to spot redundant items.
- Reallocation: Redistribute excess stock to areas with higher demand.
- Supplier Returns: Negotiate returns or exchanges with suppliers.
- Forecasting Adjustments: Improve demand forecasting to prevent redundancy.
Handling Obsolete and Redundant Items in SAP
SAP provides tools for managing these items within its inventory management module.
Managing Obsolete Items in SAP:
- Material Master Data: Set material status to “obsolete” in the material master record including the relevant planning parameters (dependent of config).
- Inventory Reports: Use MB5B and MC46 reports to identify obsolete items.
- Movement Types: Apply specific movement types, like 551 for scrapping, to remove obsolete stock.
Managing Redundant Items in SAP:
- Stock Transfers: Create stock transfer orders to move excess inventory.
- Inventory Reports: Use MMBE and MD04 to manage redundant stock.
Conclusion
Efficient management of obsolete and redundant items is essential for cost-effective inventory control. SAP tools and processes facilitate this, ensuring better resource allocation and reduced waste. By addressing the causes and implementing effective strategies, businesses can optimise their inventory and enhance productivity.
