The obsolescence definition keeps changing by department and system
INVENTORY & OBSOLESCENCE GOVERNANCE
Inventory governance is not a one-off clearance; it is stopping risk from regenerating.
8–16 weeks to unify the obsolescence definition, identify structural build-up, connect future demand, ownership and disposition actions, and establish a standing cash-flow-oriented governance mechanism.
TYPICAL DURATION8–16 weeks
OBJECTRisk inventory and its generation mechanism
BUSINESS GOALInventory structure and cash efficiency
REFERENCE INVESTMENTMid six figures RMBReference ¥400k–1m, depending on material scope and plants
01
COMMON MISREADS
Looking only at totals, ageing or a single disposition hides the structural problem.
Safety stock, strategic stock and genuine risk stock are mixed together
Future demand, substitution and order changes cannot be judged together
Disposition actions are recorded, but ownership, deadlines and outcomes are not closed
While old stock is cleared, purchasing and planning keep generating new risk
02
HOW TO JUDGE
Four questions that settle what kind of problem this is.
Definition consistency
Ask six functions to classify the same batch of materials — do the answers agree?
Data availability
Do the consumption, in-transit and substitution fields the judgment needs actually exist, and arrive in time?
Ownership
Across identification, decision, disposal and prevention, which step has no named owner?
Regeneration
After the last clean-up, did risk stock simply grow back?
The obsolescence definition and RACI template can be used internally to align the definition before anything else.
03
RISK CLASSIFICATION
Separate inventory of different natures first; only then do management actions mean anything.
Normal operating inventory
Supported by stable demand, replenishment policy and a reasonable cycle
Strategic inventory
Formed for supply risk, customer commitments or critical resources, with an explicit policy
Excess and slow-moving inventory
Consumable in future, but quantity, pace or policy needs adjustment
Obsolete and risk inventory
No credible future demand; needs substitution, return, redeployment or disposal
Disputed inventory
Frozen because quality, design, customer or ownership questions are unresolved
04
GOVERNANCE LOOP
Identify, decide, execute and prevent must form a loop.
- 01
Unified identification
Form the risk list from material, demand, ageing, substitutability and future consumption.
- 02
Tiered decisions
Distinguish keep, consume, substitute, redeploy, return and scrap strategies.
- 03
Owned execution
Name the responsible department and person, committed date, expected value and blockers.
- 04
Review and prevention
Go back to sales, design, planning, purchasing and change processes to close the generation mechanism.
05
DATA FOUNDATION
Inventory facts must connect to the future, not only look back.
Base data
- Material master, batches, ageing and value
- Historical consumption, future demand and open purchase orders
- BOM, substitution relationships, design and order changes
- Quality status, ownership and disposition records
Key rules
- One definition of risk and obsolescence
- Defined data cut-off and trusted sources
- Exception, approval and escalation authority
- Every disposition outcome traceable and reviewable
06
MEASUREMENT
Look at results, process and new risk at the same time.
Risk structure and trend under one definition
Observed by business, plant, category and lifecycle
Committed actions, completion, blockers and overdue ownership
Verified value from consumption, return, redeployment and disposal
Sources and change of risk generated during the governance period
07
RELATED PRACTICE
The actual work behind these methods.
Inventory and obsolescence governance
Our core team members participated in this project. The work aligned definitions, connected demand and consumption plans, and built tiered control, named ownership, disposal tracking and warnings.
Factory transparency and lean operations
Our core team members participated in this project. The work unified business objects and data definitions across planning, purchasing, warehousing, production and cost.
08
STARTING CONDITIONS
Inventory governance needs cross-functional participation.
Ready to start
Inventory already affects cash flow or operations, a scope can be chosen, and sales, R&D, planning, purchasing, production and finance confirm ownership together.
Preparation
Agree the governance scope and ownership mechanism, and set up the conditions for ongoing adjustment of demand, purchasing, change and disposition processes.
NEXT STEP
Bring the operating problem
you most want to change.
Delivery, inventory, operating visibility or a workflow where AI could help. Share your situation and priorities so we can identify a practical next step together.