What could potentially happen if obsolete inventory is not addressed?

Addressing obsolete inventory is crucial for the financial health of an organization. When obsolete inventory remains unaddressed, it ties up capital that could be used more effectively elsewhere, leading to financial losses. Additionally, the costs associated with maintaining this inventory, such as storage and handling, contribute to wasted resources. Over time, items may become more difficult to sell, depreciate in value, or require costly disposal, all of which further exacerbate financial strain.

By actively managing and addressing obsolescence, a company can free up resources, redirecting them to productive use, and maintaining a more efficient inventory system. This can lead to improved cash flow and resource allocation, ensuring that investments are made in items that contribute to business objectives.