The Top Three Causes of Dead Stock - and How Distributors Can Solve Them.

In distribution, every pallet, box, or SKU sitting on your shelves costs money.

If it’s not moving, it’s not just taking up space, it’s tying up working capital, inflating insurance and storage costs, and eroding your margins quietly but consistently. This is the reality of dead stock, and for small and mid-sized distributors, it's more common than you might think.

Many businesses don't realise how much profit is locked away in unsold inventory until it starts impacting cash flow. But by then, it's often too late to act.

What Is Dead Stock, Really?

Dead stock is inventory that:

• Hasn’t sold for a long period (often 6–12 months or more)
• Is no longer in demand or relevant to your market
• Can’t be returned to the supplier
• Takes up valuable warehouse space that could be used for fast-moving items

Unlike obsolete stock, dead stock still could be sold if only you knew how much you had, where it was, and whether there was still demand.

3 Causes of Dead Stock (And How to Stop Them)

1. Poor Stock Visibility

   If you can’t see what’s moving and what’s gathering dust, you can’t make good inventory decisions.
   
   When stock control lives in disconnected spreadsheets or outdated systems, you're reacting instead of managing. You might think a product line is performing, but without real-time sales trends and accurate reporting, it’s easy to miss the warning signs.
   
   The fix: Modern inventory platforms like ERP One and Go give you instant visibility into stock ageing, turnover rates, and location-specific movement, helping you proactively flag slow movers before they become dead stock.
   
   

2. Overordering from Suppliers

   Distributors often order in bulk to secure better pricing. That makes sense, until demand drops or seasonality shifts.

   We've seen distributors order six months' worth of fasteners based on a one-off spike in orders, only to have three months’ worth still sitting untouched a year later. What began as a cost-saving measure turned into a long-term liability.

   The fix: Smart reorder controls, like the ones found in our range of Klipboard ERP’s, can monitor minimum and maximum stock levels, trigger orders automatically based on real-time usage, and incorporate seasonal trends, so you're not left holding excess inventory you can't shift.
   
   

3. Relying on Outdated Demand Forecasts

   If you're forecasting based on last year’s spreadsheets, gut feel, or static sales data, you're already behind.

   Product demand shifts faster than ever, especially in 2025's volatile market shaped by tariffs, logistics delays, and customer preference changes. Relying on yesterday’s data to make today’s purchasing decisions is a recipe for waste.

   The fix: Use integrated forecasting tools that update in real time, sync with live sales data, and provide alerts for underperforming SKUs. These tools turn demand planning from guesswork into a competitive advantage. Klipboard ERP One has strong forecasting tools that help our customers to forecast demand accurately.

So, What’s the Real Cost of Dead Stock?

It's not just about wasted shelf space. Dead stock creates a ripple effect:

• Tied-up cash that could be used for growth
• Higher warehousing costs (especially across multiple locations)
• Stock write-downs when items become obsolete or damaged
• Missed sales when high-demand lines are understocked because your space is full

According to eFulfillmentService, holding dead stock costs money, with estimates that it can cost about 30% above the purchase price to maintain. A business with £100,000 in stock and 12% dead stock could be losing around £3,000 annually in holding costs. 

What Can You Do About It?

Stopping dead stock isn’t just about cutting back on purchasing, it's about better control, better visibility, and better forecasting.

Look for business management solutions, like Klipboard ERP One and ERP Go, that give you extensive inventory management controls, like:

• Real-time stock ageing reports
• Automated min/max replenishment
• Seasonal and trend-based demand forecasting
• Alerts for non-moving items
• Integration with your sales and finance data
• Centralised stock view across all branches/warehouses

The right system won’t just tell you what’s sitting still, it’ll help you stop it happening again.