The Pallet in the Corner
Why invisible inventory kills working capital and how to resolve it in IFS Cloud.
Every warehouse manager knows it. It sits in the darkest aisle, typically on the top rack, gathering dust. The shrink wrap is yellowing. The label is faded. It is the "Pallet in the Corner."
See Remediation StrategiesThe Invisible Liability
In the physical world, that pallet is just taking up space. In the financial reality of your ERP, it is an active asset inflating your balance sheet. This discrepancy is dangerous. It masks the true health of your supply chain and creates a false sense of security regarding your inventory levels.
The "Pallet in the Corner" typically represents one of three things:
- 1. Engineering Ghosts: Parts left over from a product revision (like Revision A) after Engineering released Revision B without a "use-up" plan.
- 2. The "Just in Case" Buy: Bulk material purchased to secure a volume discount that exceeded the annual consumption rate.
- 3. Returns Limbo: Customer returns (RMA) that were physically received but never processed into a disposition status.
IFS Cloud Remediation Strategies
To remove the pallet in the corner, you must move from passive monitoring to active disposition. IFS Cloud offers specific tools to automate this process.
1. The Slow Moving Part Report
Do not rely solely on stock aging. Configure the Slow Moving Part analysis to flag items where the Turnover Rate is close to zero. Set an event to trigger a "Block for Procurement" on these parts to stop the buying robot from adding to the pile.
2. Automated Write-Downs
Finance often fears the hit to the P&L. However, taking the hit is necessary. Use Inventory Value logic to automatically provision 100% of the value for stock aged over 360 days. This aligns the financial ledger with operational reality.
3. The Golden Zone Rule
Physically move the pallet. If it is not moving out the door, it should not be in the "Golden Zone" (waist-to-shoulder height near the docks). Move it to the upper racks or an off-site overflow location to free up premium space for high-velocity SKUs.
Impact Analysis
When you ignore the pallet in the corner, you pay for it three times:
- Carrying Cost: Rent, insurance, and utilities (typically 25% of value/year).
- Opportunity Cost: Cash trapped in dead stock cannot be used for R&D.
- Obsolescence: The eventual write-off when the item becomes unusable.
Quick Tip
Run the Inventory Part In Stock report filtering for "Last Activity Date" < (Today - 365). You might be surprised by how many pallets are hiding in plain sight.
