Active destocking
Open-knowledge reference entry
Active destocking in supply chain management is an active decision to reduce the inventory-to-sales ratio of a company. The inventory can include finished products, raw materials and goods in process. In general, active destocking is done following an autonomous, often financial decision by a company to improve its efficiency, free up cash and reduce its costs. Decisions for active destocking in general are made by financial executives or general managers.
Active destocking should be distinguished from reactive destocking. Reactive destocking is a reduction of the inventory when expected demand goes down. When a company is only doing reactive destocking the inventory-to-sales ratio remains unchanged. Reactive destocking in general is done by the operational managers of the logistical activities, without additional instructions.
The terms active destocking and reactive destocking were first used in an article about the Lehman Wave, published by Dutch researchers in 2009.
A Lehman wave refers to an economy-wide fluctuation in production and in economic activity with a wavelength of between 12 and 18 months, driven by a sudden major disruption of the economic system.
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This entry incorporates text from “Active destocking” on English Wikipedia. Contributors are listed in the page history. Text is available under the Creative Commons Attribution-ShareAlike 4.0 License. Selected authority identifiers and statements are retrieved from Wikidata under CC0; their references and qualifiers remain part of the verification path.