Stock that is becoming obsolete poses a real risk to a company’s performance.
It ties up valuable working capital that could be more usefully employed elsewhere in the business to generate value and can have a serious impact on the company’s balance sheet. In the current financial climate when companies are finding it harder than ever to raise capital and all managers are under pressure to reduce costs, obsolete stock is a cost best avoided.
The problem is especially acute for companies which face a challenge in keeping track of stock – for example companies that run large teams of field service engineers and who work to tight customer Service Level Agreement (SLAs).
With stock spread between warehouses, forward stock locations and engineers’ vans, it is only too easy for such companies to over-order spare parts, for fear that an engineer might miss a 2 or 4 hour SLA for a repair because a part was unavailable.
All this extra inventory costs money and while it lies unused in a warehouse or van its value on the company’s balance sheet will depreciate until it is written off altogether.
"No-one likes to see money disappear into thin air, but that is effectively what will happen if you purchase parts that you never use," said Mark Garritt, Managing Director of ByBox, the UK’s leading specialist in in-night parts distribution and field service solutions.
"Over-stocking is literally a waste of money – and a waste of opportunities. The cash used to purchase all that extra stock may well have been better used on expanding the business or bailing the company out of an emergency".
"Especially in a recession, over-stocking makes no sense at all. Companies need as much financial flexibility as they can get."
While some companies may be able sell their obsolete spare parts to a broker, others in the technology sector will face additional costs for disposal of stock, under the Waste Electrical and Electronic Equipment (WEEE) Directive.
How can ByBox deliver a solution to the problem of stock obsolescence?
By using ByBox’ network of 18,000 electronic drop boxes at 1,350 locations, underpinned by ByBox’ unique Thinventory ™ software platform, inventory management is linked to a solid dependable transport network delivering real-time control and visibility. Companies can free up capital invested in over-stocking and save on running costs at the same time.
ByBox delivers parts pre-8am to the nearest drop box or manned handover site to an engineer, ready for collection at the start of the working day, or pre-10am direct to site.
Thinventory gives complete real-time visibility of the supply chain, making it easy to identify where the nearest suitable part is to service a new call, across all locations, including the engineers’ vans. This means that companies are able to reduce their stockholding and downsize their warehousing, FSL, transport and overhead charges.
Parts that are about to become obsolete – for example at the end of a particular customer service contract – can be readily pinpointed then moved around the system to where they are required. Thinventory ™ provides the visibility, control and confidence to operate a lean supply chain, reducing new stock purchases and supporting customer SLAs.
Additionally, by using the ByBox drop box network in reverse, engineers can return faulty parts which are still under warranty to the manufacturer, using one of ByBox’ bar coded BlackStripe™ labels which automatically route returns to the correct destination maximizing claims.
ByBox also operates a network of 29 Forward Stock Locations across the UK which hold parts that may be urgently required, and its electronic iBoxes can be used by service engineers as ‘mini-Forward Stock Locations’.
Founded in 2000 with the aim of simplifying supply chains, ByBox is one of the industry’s greatest success stories and now holds 70 per cent of the field services market and a host of blue chip customers including Coca Cola, Konica Minolta, Ricoh and Bunzl.