What does "obsolescence" refer to in supply terms?

Obsolescence in supply terms primarily refers to a situation where goods are no longer wanted by consumers or users, often due to advancements in technology, changes in fashion or preferences, or the introduction of newer products. This leads to items being phased out from the market, affecting inventory management and procurement decisions.

When products become obsolete, organizations may face challenges in selling their existing stock, which can result in financial losses. Companies must stay aware of market trends and consumer preferences to manage their inventories effectively and reduce the risk of obsolescence. This makes understanding obsolescence crucial for effective supply chain management and planning to avoid overstocking items that will no longer be in demand.

The other options focus on different concepts that do not directly relate to the term "obsolescence." For instance, a condition of a contract pertains to legal terms within agreements, while a decrease in demand refers more broadly to market dynamics rather than specifically indicating that goods are unwanted. A legal obligation to deliver goods is related to contract law and vendor responsibilities, not the concept of obsolescence itself.