Stock rotation
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is stock rotation?
A stock rotation is a supplier program that lets a distributor return slow-moving stock for credit, within a limit and against an offsetting new order. Rotations typically run once or twice a year, and the supplier agreement sets the terms, such as a cap based on the distributor’s recent purchases and a restocking charge.
How it works
The phrase also has an everyday warehouse meaning: rotating stock so the oldest units ship first, as in FIFO. Returns outside a rotation program are handled case by case with the supplier, often called a return to vendor (RTV).
Stock rotation example
A supplier allows a yearly rotation up to a set share of last year’s purchases. The buyer lists the slowest items within that cap and places a new order of equal value for items that sell.
Related terms
- Dead stockDead stock is inventory that hasn’t sold for a long time and probably won’t sell at its normal price.
- Return merchandise authorization (RMA)A return merchandise authorization (RMA) is the approval and tracking number a distributor issues before a customer sends a product back.
- SupplierA supplier is any business that provides products or services to another business.
- Inventory carrying costInventory carrying cost is the total cost of holding inventory over time: the cash tied up, space, insurance, taxes, handling, damage and obsolescence.
