Advanced Strategies for Slow-Moving Product Management in the Supply Chain

Slow-Moving Product Management is one of the most complex and least visible challenges within supply chain planning. Although these products represent a small share of total sales volume, they often account for a disproportionate amount of inventory, operational risk and tied-up working capital. Poor management not only leads to overstocks and obsolescence, but also distorts key decisions in forecasting, procurement and service level management.

In this article, we explain how to handle slow-moving products using an advanced, realistic approach. We will analyse why they challenge traditional planning models, what their true financial impact is, when it makes sense to forecast their demand and how to define inventory policies aligned with risk and business objectives. The goal is not to remove complexity, but to manage it with judgement and data.

Why Managing Slow-Moving Products Challenges Traditional Planning

Classic planning approaches are designed for products with frequent and relatively stable demand. However, slow-moving products behave very differently and require a completely different framework.

The Long-Tail Problem in Complex Portfolios

In many organisations, a small percentage of SKUs accounts for most of the volume, while a long tail of references delivers sporadic sales. This long tail is particularly common in businesses with wide catalogues, product customisation or highly segmented markets.

The issue arises when companies try to plan the entire portfolio using the same rules. Fast-moving products “pull” the models, while slow movers introduce statistical noise and drive inefficient decisions. Without the right segmentation, planning loses both focus and accuracy.

Volatility, Intermittency and False Demand Signals

Demand for slow-moving products is often intermittent, with long periods of no consumption followed by occasional spikes. If these spikes are interpreted as a trend, they create false signals that inflate the forecast and trigger unnecessary replenishment.

In addition, small absolute changes produce large relative swings. One extra unit more or less can dramatically affect metrics such as MAPE or BIAS, which means KPIs lose operational meaning unless they are interpreted correctly.

Defensive Decisions That Make the Problem Worse

Faced with uncertainty, many organisations default to defensive decisions: holding stock “just in case”, applying standard coverages or raising service levels without differentiating products. While these choices aim to protect operations, in the medium term they make the problem worse by increasing slow-moving inventory, cost and obsolescence.

The Financial Impact of Slow-Moving Products

Beyond the operational challenge, slow-moving products have a direct and significant impact on the profit and loss statement and the overall financial health of the business.

Tied-Up Capital and Opportunity Cost

Every unit stored of a slow-moving product represents tied-up capital that cannot be used for more productive activities. This opportunity cost is rarely made visible, but it directly affects investment capacity, liquidity and return on assets.

In low-margin sectors, this effect can be decisive. It’s not only about how much you sell, but how much capital remains locked without generating value.

Obsolescence, Shrinkage and Write-Offs

The longer a product sits in inventory, the higher the risk of obsolescence, deterioration or expiry. In many cases, slow-moving products end up being cleared through heavy discounting or written off entirely.

These losses are often recognised late and at an aggregated level, which makes it harder to learn from planning mistakes and adjust future policies.

Why Slow-Moving Inventory Distorts Global KPIs

Slow-moving inventory distorts key indicators such as average turnover, service level and storage cost. It also introduces bias into performance analysis, because aggregated KPIs hide very different behaviours across products.

Without a segmented view, it becomes impossible to make informed decisions about where to adjust service, coverage or investment.

Forecasting for Slow Movers: When and How to Predict

One of the biggest mistakes is assuming every product needs a detailed forecast. When it comes to managing slow movers, knowing when not to forecast is just as important as knowing how to do it.

Identifying When Forecasting Adds Value

It does not always make sense to generate detailed forecasts for products with sporadic consumption. If frequency is very low and financial impact is limited, forecasting adds little operational value.

In these cases, approaches such as demand-driven planning, make-to-order or simple replenishment rules can be more effective than complex models.

Models and Approaches for Irregular Demand

When forecasting is necessary, there are methods designed specifically for irregular and intermittent demand. Models such as Croston and its variants separate demand frequency from order size, providing more realistic estimates than simple averages.

These approaches do not eliminate uncertainty, but they help reduce systematic bias and support decisions that better reflect the product’s actual behaviour.

Forecast by Exception and Focus on What Matters

An effective strategy is to apply forecasting by exception. Instead of trying to optimise every SKU, companies identify those slow movers that, due to their criticality or financial impact, require special attention.

This approach frees up planner time, reduces model noise and improves decision quality where it truly matters.

Advanced Classification to Define Differentiated Policies

The foundation of good slow-moving product management is intelligent classification. Not all slow movers are the same, and they should not be treated in the same way.

Combining Turnover, Variability and Criticality

Turnover alone is not enough. It must be combined with variability indicators and the product’s operational or commercial criticality. A SKU may have low turnover but still be critical for a strategic customer or business continuity.

Bringing these dimensions together helps prioritise resources and define policies aligned with real risk.

Segmentation by Operational and Financial Impact

Beyond sales volume, it is worth analysing each product’s operational and financial impact: cost to serve, space usage, logistics complexity or dependency on specific suppliers.

This segmentation helps identify which products justify a minimum coverage and which can be managed on demand or with longer lead times.

Stop Treating All SKUs the Same

One of the biggest advances in planning is accepting that uniformity is inefficient. Treating all SKUs with the same rules simplifies management, but it leads to suboptimal decisions.

Controlled differentiation is the key to balancing service, cost and risk in complex portfolios.

Inventory Policies Aligned with the Real Demand Pattern

Once products are classified, inventory policies must align with their behaviour and business impact.

On-Demand Stock, Dynamic Buffers and Minimum Coverage

For many slow-moving products, on-demand stocking or minimum coverage is the most rational option. In other cases, dynamic buffers adjusted to risk help absorb spikes without permanently inflating inventory.

The key is to define clear rules and review them regularly based on actual behaviour.

Managing Risk Versus Service Level

Not all products require the same service level. Raising it indiscriminately for slow movers is usually costly and inefficient.

Managing risk means accepting trade-offs: longer lead times, substitutions or customer agreements on availability.

Aligning Inventory with Business Objectives

Finally, slow-moving product management should align with the company’s strategic objectives. Reducing inventory can release capital, but it can also weaken the value proposition if done without proper criteria.

Advanced planning allows scenarios to be simulated and trade-offs to be assessed before making irreversible decisions.

Planning Slow-Moving Product Management Means Planning with Judgement

Managing slow-moving products is not about removing complexity, but about making deliberate decisions on where to invest service, stock and planning effort. Companies that approach this challenge with data, segmentation and differentiated policies reduce risk, release capital and improve the quality of overall planning.

At Imperia, we help organisations manage complex portfolios through advanced planning, intelligent segmentation and inventory policies aligned with market demand. Our software enables you to identify risks, prioritise SKUs and make decisions based on reliable data.

If you would like to learn how we can help you optimise the management of slow-moving products in your supply chain, request a free consultation with our experts.