How to Read and Use an Inventory Age Report: A Beginner Guide

Reading an Inventory Age Report is a practical skill that pays back quickly. The report groups inventory by how long items have been in stock and helps you prioritize actions such as promotions, transfers, or disposals. This guide walks beginners through reading the report, interpreting common patterns, and using results to create simple operational and financial improvements.

Step 1. Understand the layout

Most Inventory Age Reports are organized by SKU or product family, with columns for each age bucket (for example 0 30, 31 60, 61 90, 91+ days) and the quantity and value in each bucket. Some reports also break numbers down by warehouse location, lot, or serial number. Begin by scanning for SKUs with large percentages of their quantity in the older buckets.

Step 2. Identify concentration and exceptions

• High concentration in older buckets: This indicates slow movement and potential obsolescence risk. Prioritize these SKUs for review.
• Even distribution across buckets: This often reflects steady turnover and healthy demand patterns.
• Most quantity in new buckets: These SKUs are flowing well and may justify higher safety stock or faster replenishment cycles.

Step 3. Calculate simple metrics

Metrics make the report actionable. Useful beginner metrics include:

• Aged inventory percentage = (Quantity in 91+ days / Total quantity) x 100.
• Average age = weighted average of days in inventory using bucket midpoints.
• Carrying value by age = sum of cost x quantity for each bucket.

These numbers show financial exposure and help compare items on the same scale.

Step 4. Drill down to root causes

Once you find an item with significant aging, look deeper. Ask simple questions:

• Is there an accuracy issue with receipt dates or returns?
• Did demand drop due to seasonality or a market shift?
• Is pricing or product quality a factor?
• Are forecasts or purchase quantities too high?

Data from your WMS or ERP can show movement history, returns, and sales trends that explain the pattern.

Step 5. Take practical actions

Here are typical actions to remove or reduce aged stock:

• Promote or discount: Short-term sales or bundling reduce aged inventory quickly.
• Transfer to a different location: Move items to stores or warehouses with higher demand.
• Return to vendor: If contractual terms allow and the issue is supplier related, initiate returns.
• Rework or repackage: Minor fixes can restore saleability for certain product types.
• Write-down or scrap: When items cannot be recovered, record a write-down to clean the books.

Step 6. Update policies and processes

Use the findings to adjust purchasing, safety stock, and replenishment logic. For example, if multiple SKUs consistently show age beyond 60 days, shorten lead times, reduce order quantities, or implement vendor-managed inventory for those items.

Practical example

Imagine a small electronics distributor. The Inventory Age Report shows SKU X has 1,000 units total: 200 in 0 30, 100 in 31 60, 200 in 61 90, and 500 in 91+ days. The aged inventory percentage is 50 percent. Actions might include an immediate promotional discount for SKU X to move the 91+ stock, contact the supplier for return or credit, and reducing future purchase orders for SKU X until sell-through improves.

Using software to automate

Most WMS or ERP systems can generate Inventory Age Reports on demand and allow you to customize buckets and filters. Beginner-friendly features to enable include automated alerts when SKUs cross an age threshold, dashboards showing top aged SKUs, and scheduled exports to procurement or sales teams for follow-up. If your organization uses services like a modern WMS, connect the age report to cycle counting so counts focus on older inventory to validate accuracy.

Best practice tips for beginners

• Run the report regularly, commonly weekly or monthly depending on turnover.
• Use both quantity and value views to balance operational and financial priorities.
• Include stakeholders from purchasing, sales, and finance when reviewing aged items so actions are aligned.
• Start small: pick the top 10 aged SKUs by value and resolve those before expanding the program.

Reading an Inventory Age Report is straightforward, and the actions you take can quickly improve cash flow and reduce storage costs. Begin with the basics, keep the process repeatable, and use the report as a starting point for small, measurable changes.