Obsolete should be defined as materials, equipment or parts which are no longer usable in the service for which they are purchased and which cannot be utilised safely or economically for any other purpose. Broadly, it can be said that spares for plants sold become obsolescent when the machines they are carried for go out of production or are no longer available. Ordinarily, obsolescence arises on account of the following reasons:
- Adoption of standardisation or elimination of non-standard varieties.
- Faulty planning leads to over stocking of inventory.
- Non-implementation of project/job.
- Changes in demand due to change in fashions and supply conditions and change in business policy.
- Purchasing wrong items results in non-utilisation of stores.
- Bad communication within the organisation as well as with suppliers.
- The sudden emergence of new technology or a design change.
- Excess purchasing, whether due to wrong forecast of requirement or to take advantage of quantity discount.