Get to know the vital terms of Logistics and Supply Chain Management.
In the field of logistics and supply chain, Defective Goods Inventory (DGI) is the stock of products that can be recognized as being defective or unsuitable for sale. They may be due to production problems, transportation mishaps, or non-conformity to certain quality requirements. Managing DGI is highly sensitive in order not to compromise the quality of products offered or the satisfaction of the customers.
Defective goods inventory is items that are kept aside from the master inventory due to their defectiveness. These are the products that are further tested, repaired, or disposed of and are not part of the products that are ordered by the customers. This process is used to make sure that only quality products are taken to the customer.
Common reasons for items being classified as defective include:
Manufacturing Defects: Problems that arise during the manufacturing process, for instance, failure in assembly line or substandard materials.
Damage During Handling or Transit: Merchandise may be destroyed in the process of transportation or may be affected in some way while in storage.
Quality Control Failures: Products that do not meet the organizational or industrial standards of quality are withdrawn from the shelves.
This is because there is a need to ensure that the inventory is protected by separating DGI from other common stock. By keeping defective goods separate:
Quality Assurance: Organizations ensure that faulty products do not reach the customers.
Efficient Inventory Management: Companies can determine which items should be repaired, returned, or written off.
Cost Control: Proper management of DGI reduces some of the losses and keeps repairing or disposal expenses regulated.
DGI is a critical component of the system because it helps to prevent substandard products from being sold to customers. Balancing DGI is useful for inventory accuracy, cost, and maintaining organizational reputation for quality.