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Playbook · Industrial Distribution

How to reduce excess and obsolete inventory in Industrial Distribution (2026)

Last updated September 2026

The short answer

Clear the graveyard aisle and stop the write-offs. 4 steps, in order, for a industrial distribution operation.

What you are working against in Industrial distribution

  • Overstocked in one branch, out of stock in another
  • Dead stock accumulating across the network with no owner
  • Turns and write-offs scrutinized every quarter

Before you start: where Industrial distribution usually sits

MetricTypical for Industrial distributionWhat good looks like
Inventory Turnover Ratio 3–5 turns Top quartile above 5
Inventory Carrying Cost 25–40% / yr Wholesale holding often exceeds 25%
Days Sales of Inventory 60–120 days Top quartile turns inventory in under 75 days
GMROI 1.8–3.0 Top quartile above 3

Published ranges, not targets. Take your own baseline before step one.

The steps

  1. 1Surface slow-moving, excess, and obsolete SKUs across all branches in one view
  2. 2Redistribute stock to the branch that actually needs it before buying new
  3. 3Price and monetize true dead stock at fair market value
  4. 4Right-size reorder points so excess stops rebuilding

Why it pays off

~25% / year
Excess and obsolete inventory costs the typical distributor about 25% of its value every year in storage, shrinkage, and cost of capital.
Industrial Supply Magazine
20–30% / year
Inventory carrying cost typically runs 20–30% of inventory value per year (often 25–40% for wholesale distributors).
Institute for Supply Management (via NetSuite)
20–30%
AI-driven optimization can cut inventory 20–30% while holding service levels, and reduce forecasting error up to 50%.
Epicor / MDM

Frequently asked questions

How do you tell whether this is working in industrial distribution?

Recompute the same way each period. Excess & Obsolete (E&O) Reserve: E&O Reserve = Σ (at-risk inventory value × age/consumption risk factor). Inventory Turnover Ratio: Inventory Turns = Cost of Goods Sold ÷ Average Inventory. Inventory Carrying Cost: Carrying Cost % = (Capital + Storage + Service + Risk costs) ÷ Average Inventory Value.

What does Industrial distribution start from?

Inventory Turnover Ratio of 3–5 turns is the published band for industrial distribution — top quartile above 5. The 4 steps above are the same in any sector; the band you start from is not.

See what your inventory is really costing you.

Tell us where the cash is trapped — excess stock, idle surplus, slow RFQs — and we'll show you the outcome Maintained can unlock.

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