Dead Stock SOP: Detection Rules & Monthly Procedure

This is a standard operating procedure for finding and clearing dead stock. Copy it into your ops wiki and run it on the first of every month.

Slow-moving stock doesn't fix itself#

Dead stock is inventory that hasn't moved in a set period and won't sell at full price. Left alone it grows - eating cash, shelf space, and the count time that should go to live SKUs. A monthly SOP turns it from a year-end surprise into a routine task.

What counts as dead stock#

Set an aging threshold, then flag anything past it. Thresholds vary by category - these are operational starting points, not rules:

InventoryQuick's Dead Stock Finder runs this against your existing data - no CSV upload - with a 90-day default you can adjust from 30 to 365 days.

The monthly procedure#

1. Pull the slow-and-dead report past your aging threshold.
2. Confirm flagged items against open orders and recent receipts so a data lag doesn't mislabel a live SKU.
3. Stop the bleeding - purchasing cancels or pauses reorders on every confirmed item.
4. Decide the disposition for each item using the table below.
5. Execute - sales applies markdowns and bundles; purchasing arranges returns.
6. Record write-offs and apply a reserve (manual - see the caveat below).
7. Log actions taken and schedule the next run for the first of next month.

Who owns each step#

Naming the owner per step is what makes the SOP actually run. An unowned step is a skipped step.

Decide: discount, bundle, return, or write off#

Work top-down by tied-up cash. Clearing the five most expensive dead items usually frees more cash than clearing fifty cheap ones.

Setting a reserve#

A reserve recognizes that aging stock is worth less than its cost. Common starting points by age:

These are operational starting points, not accounting guidance. Reserve and write-off treatment depends on your accounting method and local tax rules - confirm the numbers and timing with your accountant before booking anything. The Dead Stock Finder identifies aging items; it does not post journal entries, so the Record step stays manual and finance-owned.

Common mistakes#

• No fixed cadence, so review only happens at year-end when the write-off is huge.
• Flagging without confirming, then discounting an item that was just reordered.
• Leaving reorders on - the report clears but the same SKU refills next cycle.
• Treating every item the same instead of working down by tied-up cash.

Run it on the 1st#

The whole point is a single document an ops lead can lift, paste into the team wiki, and execute monthly: thresholds to flag, a seven-step procedure, an owner per step, and a disposition table. Put a recurring task on the first of the month and the backlog never builds.

InventoryQuick starts at $19/mo and its Dead Stock Finder surfaces aging items from your live data so step one of this SOP takes seconds.

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Related: Physical Inventory Count - Cycle Counting vs Physical Inventory - Inventory Best Practices - Reorder Point Formula