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Inactive Item and Obsolescence Review Worksheet

Item masters grow and rarely shrink. This worksheet helps you review items with no recent movement, decide whether to keep, deactivate, sell or write them down, and see the value and reserve involved.

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Part number	Description	On hand	Unit cost	Extended value	Months since last movement (months)	Open demand or BOM use	Action	Reserve (%)	Reserve amount
				$1,577					$1,577
				$2,184					$1,092
				$324					$0
				$1,786					$714
				$75					$75

Total reviewed value

$5,946

Total proposed reserve

$3,458

Reserve as share of reviewed value

58.2%

Export a list from your ERP of items with no transaction in your chosen window, paste it here, and review each line with planning, engineering and service. Reserve percentages should follow your accounting policy and auditor guidance. Never deactivate an item with open demand without clearing it first.

Idle item analysis from your ERP

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How to use it

Pull a list from your ERP of items with no issues or receipts in a period such as 12 or 24 months, along with on-hand quantity and cost. Paste or key the rows in, then record the months since last movement and whether anything still uses the part: open orders, an active BOM or service parts demand. Choose an action and, where a write-down applies, a reserve percentage. The sheet calculates extended value and reserve per line and in total.

Start with items that have on-hand stock
Check open demand and BOM use before deciding
Involve service and engineering
Record the decision for audit

Deactivate versus delete

Most ERPs do not allow deletion of an item that has transactions, and you would not want to. The usual route is to flag the item inactive, obsolete or blocked so it cannot be selected on new orders, BOMs or requisitions, while history remains for reporting and warranty. Before flagging, remove it from active BOMs, planning and purchasing info records, and confirm no open documents depend on it.

Reserve and accounting

Excess and obsolete inventory is generally valued at the lower of cost and net realizable value under both US GAAP and IFRS. The reserve percentage here is a planning aid for the discussion with finance. Your policy might use aging buckets, a demand based method or specific identification. Follow your accountant's method and document it.

Common mistakes

Deactivating items that still have service demand, ignoring parts used only in rare configurations, and reviewing only by age. Age alone catches seasonal items and misses items with large stock and no future demand. Combine idle time, value and forecast demand.

Frequently Asked Questions

What idle period should I use?

Twelve to twenty-four months is a common starting window for manufacturing, shorter for fast moving or perishable goods. Use longer windows for spare parts with long life cycles.

Can I deactivate an item with stock?

Usually it is better to dispose of or transfer the stock first, because blocked items with stock are hard to count and value. If you must block it, mark it clearly and keep it on the cycle count list.

How do I handle service parts?

Review them against installed base and warranty obligations. Parts needed for supported products should stay active even if idle for long periods.

Does this replace an obsolescence policy?

No. It supports the review. Your policy defines criteria, reserve method and approvals.

If building the idle item list takes days, we can generate it from your ERP read-only and flag likely duplicates and BOM usage for review.

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