By Paul R Salmon FCILT FSCM FCMI
Introduction: The Overlooked Discipline in Supply Chains
When organisations think about inventory optimisation, the conversation typically revolves around building up stock – ensuring that the right parts, in the right quantities, are available at the right time to maintain operational readiness or meet customer demand. However, there’s an equally critical but often overlooked discipline: run down planning.
As systems and products approach the end of their lifecycle, the instinct to continue ordering “just in case” creates significant challenges. Without deliberate planning, organisations risk tying up working capital in obsolete stock, creating logistical inefficiencies, and incurring hefty write-off and disposal costs.
In long-lifecycle environments like defence, where platforms often serve for decades and supply chains span multiple tiers, failing to manage inventory drawdown proactively can result in legacy issues lasting years after a platform retires. Similarly, in fast-moving commercial sectors such as apparel or consumer electronics, poor run down planning drives markdown cascades and environmental waste.
This article explores why run down planning is essential to modern inventory management and how both commercial and defence organisations can apply it to drive efficiency, reduce waste, and support sustainability.
What is Run Down Planning?
Run down planning is the process of deliberately managing and adjusting inventory levels in anticipation of reduced demand as a product, system, or platform nears the end of its life. It ensures that:
✅ Sufficient spares remain to support operations without overstocking.
✅ Excess inventory is avoided, minimising write-offs and disposal costs.
✅ Supply contracts are aligned with diminishing demand to prevent penalties or inefficiencies.
In defence, this might mean optimising spares for an ageing fleet of vehicles scheduled to retire in five years. In retail, it could involve efficiently running down seasonal items or discontinued product lines.
Key Elements of Run Down Planning
Demand Forecasting – Predicting the declining need for items using usage patterns, failure rates, and planned retirements. Procurement Adjustments – Scaling down orders and renegotiating contracts with suppliers. Disposition Strategies – Developing plans for selling, recycling, or reusing excess inventory.
Why Is It So Often Overlooked?
Despite its importance, run down planning is underutilised in many organisations. This stems from a combination of cultural, operational, and contractual factors:
1. Focus on Availability at All Costs
In sectors like defence, organisations are highly risk-averse. The fear of not having a critical part available often drives over-ordering, even late in a system’s life.
2. Uncertainty About Retirement Timelines
Delays in replacement programmes or indecision on retirement dates make confident drawdown planning difficult. For example, extending a platform’s life by two years can invalidate earlier forecasts and create spares shortages.
3. Supplier and Contractual Inertia
Long-term agreements and supplier resistance to variability can prevent rapid adjustments to lower volumes, perpetuating over-supply.
4. Lack of Tools and Data
Many organisations lack the analytics tools and clean data needed to model demand decay effectively.
The Cost of Poor Run Down Planning
Failure to manage run down effectively can create significant financial and operational burdens:
🔻 Obsolescence and Write-Offs
Unused stock for retired systems often ends up written off at considerable cost.
🔻 Tied-Up Capital
Excess inventory locks working capital that could be redeployed for innovation, new projects, or operational improvements.
🔻 Storage and Disposal Costs
Holding unneeded stock consumes valuable warehouse space and incurs costs for responsible disposal, particularly with hazardous materials in defence supply chains.
🔻 Sustainability Risks
Excess stock often goes to landfill, undermining ESG commitments and potentially attracting regulatory scrutiny.
Lessons from Defence and Industry
Defence Sector Example: Legacy Aircraft Spares
When several NATO air forces retired legacy aircraft in the 2010s, warehouses were left stocked with millions of pounds worth of spares for platforms no longer in service. In some cases, more than 40% of inventory for these fleets had to be written off.
Success Story: One defence organisation successfully reduced inventory by 30% through proactive forecasting, supplier renegotiation, and early disposition planning. This avoided millions in write-offs and freed up warehouse capacity.
Commercial Sector Example: Zara and Apple
In fast-moving industries like fashion and consumer electronics, run down planning is critical to avoid markdown cascades and e-waste.
Zara uses advanced analytics to phase out stock for discontinued lines efficiently, achieving markdown reductions of up to 30%. Apple relies on lifecycle management teams to draw down components ahead of new product launches, recycling surplus materials into next-generation products.
The Circular Economy Angle
Run down planning supports sustainability goals by reducing waste and enabling remanufacturing or recycling of surplus parts. For organisations committed to ESG and the circular economy, this is a critical enabler.
Defence: Components can be reclaimed for training platforms or remanufactured for allied forces. Retail: Textiles and components can be recycled into new products, reducing environmental impact.
Conclusion
Run down planning isn’t just an afterthought – it’s a critical component of inventory optimisation. By adopting proactive, data-driven approaches, organisations can reduce costs, free up capital, and improve sustainability outcomes.
For supply chain leaders, mastering run down planning is an opportunity to demonstrate strategic thinking that goes beyond the “buy and hold” mentality. In today’s world of fiscal pressure and environmental responsibility, it’s no longer optional.
Leave a Reply