Managing Excess & Obsolescence: A Critical Process That Can’t Be on Autopilot

Managing Excess & Obsolescence: A Critical Process That Can’t Be on Autopilot

In inventory management, the Excess and Obsolescence (E&O) process can sometimes feel like a background task — but when mismanaged, it becomes an urgent, high-risk liability. Whether you're holding too much of the wrong part or not enough of the critical ones, the consequences are real: lost money, lost time, and lost trust.

Contrary to popular belief, managing E&O is not just about scrapping old inventory. It’s about making informed, proactive decisions to prevent buildup, support service commitments, and maintain a lean, responsive supply chain.

Key Actions: Insight, Alignment, and Urgency

An effective E&O process requires clear coordination, especially with planning, procurement, finance, and operations. It is not an isolated function.

• Identify available vendors early: Understand your supply options, lead times, and delivery conditions. Build strong relationships with reliable contacts so you’re not scrambling during emergencies.
• Know your contracts and SLAs: Your strategy for clearing or repurposing inventory should align with business commitments and timelines.
• Secure timely approvals: Have escalation paths and authorization flows ready. Delays in decision-making can lead to missed windows of opportunity.

From Reports to Results: How Data Analytics Powers E&O Decisions

The reporting function plays a mission-critical role — but it’s not just about spreadsheets. It’s about turning raw data into strategic insights.

You need team members who combine inventory management expertise with strong data analytics skills. These professionals can:

• Spot patterns that indicate obsolescence risks
• Pick the right parts for action based on cost, criticality, and usage
• Tell the story behind the numbers to drive executive support

Without accurate, insightful reporting and analytics, the E&O process becomes guesswork — and that’s a fast track to poor decisions and missed savings.

E&O Process: Balancing Automation with Agile Iteration and Control

While automation can streamline processes and improve efficiency, it’s essential to iterate and adapt the Excess and Obsolescence (E&O) process continuously. It’s tempting to assume that once automation is in place, the process can run on autopilot — but agile principles remind us that feedback loops and continuous improvement are key to sustainable success.

Rather than applying a rigid, one-size-fits-all approach to E&O reviews, we recommend using iterative cycles to evaluate and refine strategies regularly. Just like in agile project management, the E&O process should evolve based on:

• Data-driven feedback: Continuously assess the performance of your automation models. Are they removing parts that shouldn’t be disposed of? Are they missing critical parts due for restocking?
• Collaboration: Work closely with cross-functional teams (e.g., planning, procurement, finance) to stay aligned on priorities and make adjustments as needed.
• Controlled automation: While full automation is highly recommended when feasible, it should be accompanied by established controls to catch potential errors and ensure that the process remains flexible enough to accommodate unforeseen changes in demand or vendor performance.

It’s essential to stay agile in how you monitor and adjust the methodology — because, without periodic iterations and reviews, even automated systems can lead to costly oversights or inefficiencies.

When done right, the E&O process not only reduces waste — it frees up working capital, strengthens your supply chain, and ensures you’re ready when it matters most.