Understanding and Calculating SLOB Inventory

Oct 14, 2024

Calculate SLOB Inventory: Slow Moving and Obsolete Inventory

Introduction to SLOB Inventory

  • SLOB inventory stands for Slow-moving and obsolete inventory.
  • This type of inventory can occupy significant space in warehouses.
  • It poses a risk to business profitability and sustainability.

Key Components of a Profitable Supply Chain

  • Focus on three pillars: Service, Costs, and Inventory (cash).
  • Important to calculate inventory turnover ratio.
  • Reference to articles dealing with inventory turnover ratios and EOQ formulas.

Understanding SLOB Inventory

Obsolete Inventory

  • Products that are no longer needed, outdated, or from old collections.
  • Often need to be destroyed, donated, or heavily discounted.
  • Result in financial losses as they lose their value.

Slow-moving Inventory

  • Also known as Excess, Aged, or Leftover Inventory.
  • Products that are needed but in excess.
  • Excess inventory leads to additional storage costs and potential need for discounts.

Calculating SLOB Inventory

Calculating Obsolete Inventory

  1. Identify Active vs. Obsolete Inventory
    • Define products in active inventory and obsolete goods.
    • Use Excel to automate identification based on dates.
  2. Calculate Obsolete Inventory Value
    • Use Column F in Excel to find value.
    • Pivot tables can help in calculating total obsolete stock value.
    • Track KPI weekly to reduce obsolete inventory.

Calculating Slow-moving Inventory

  • Inventory Turnover Calculation
    • Calculate for every product by dividing stock value by sales x period (days).
  • Identify products with slow stock turn by setting thresholds.
  • Adjust limits based on business needs for varied product families.

Implementing SLOB Inventory KPI

  • Download free Excel template to implement SLOB KPI.
  • Calculate both obsolete and slow-moving inventories.
  • Repeat calculations weekly to track changes.
  • Share results across departments for collaborative action.
  • Focus on products with highest turnover values.

SLOB Inventory Action Plan

  1. Download the Excel SLOB calculation spreadsheet.
  2. Calculate and analyze your Obsolete and Slow-moving Inventory.
  3. Repeat the calculation weekly for consistent tracking.
  4. Communicate results for cross-departmental efforts.
  5. Focus on key inventory turnover products to minimize SLOB.

Additional Resources

  • Links provided for further reading on inventory turnover ratios, EOQ formula, and safety stock calculations.