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What is Stock Ageing Analysis and How Does it Help in Reducing Cost?

What is Stock Ageing Analysis?

The most critical facets of every business model are storage or inventory. In order to curtail the losses that will occur from stale stock, it is imperative to control their movement and shelf life. Stale inventory also tends to be redundant, and would obviously ultimately depreciate its value. Excessive stock holding, with the fear of not providing optimal goods to market to buyers, comes with its drawbacks. The more things you’ve got, the more space you need. It also costs to do more inventory control and audits, potentially requiring additional manpower to work the warehouse.  Stock ageing analysis would thus help companies store only the appropriate quantity of inventory, removing the other needless variables that would negatively affect the viability and competitiveness of a company.
Stock Ageing Analysis reports help in monitoring stocks and identify slow-moving inventory or such stocks that is not converting into prospects.

Why Stock Ageing Analysis is Important for Corporations?

stock aging analysis

  • Selling old or obsolete stock in the market for discounted rates which will further help getting rid of them.
  • Improving decision making on the timing and quantity of inventory acquisitions or output.
  • Understanding the duration of how long your products spend in inventory and compare performance against industry benchmarks.
  • The inventory control technique used for each kind of item. You can quickly find out about the pace of the movement of each stock with the stock ageing analysis study.
  • It may also include the time when an inventory arrived in the premises of each item including the delivery scheduling information, allowing you to focus your attention on the slowest moving items.
Insights from stock ageing research can enable a company owner to predict some of the incidents that can influence the organization. Potential buyers who closely track the growth of your market are always keen on knowing the inventory of your firm.

How can Stock Ageing Analysis help in reducing Costs?

Stock ageing analysis reports are prepared based on monitoring and identifying slow-moving stocks or those products that are not generating revenues for the organization. Suppose, a company purchases some stock and incurred some cost of production. But, somehow the stocks is not getting sold. It will try to sell it off at any cost, within its validity period, in order to avoid incurring any loss on the organization’s part. In such conditions, a report called the Ageing Analysis report is prepared based on determining the age of the product, in terms of valuation done on the basis of the date of purchase of such stocks that helps the management of the concerned organization in taking fruitful decisions.

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