Avoid Stockouts So Customers Don’t Walk Out

Did you know retailers lose more than $600 billion a year in lost sales due to stockouts? Believe it or not, that’s what research estimates happens to companies annually around the world.

In the inventory management world, stockouts are the flip-side of overstocks. Neither situation is good for a company.

When you carry too much inventory, you end up paying to hold it. Your stock sits in the warehouse collecting dust. And in a manner of speaking, debt. And carrying stock for too long forces many companies to sell at markdown to make way for new inventory.

Running out of stock is just as bad to any business. A customer visits your store or eCommerce channel to find the item they expected to purchase is unavailable.

Maybe in some cases, it’s a sign that your product unexpectedly sold well. In most cases, though, it means a business needs to manage its inventory better.

And if a customer doesn’t find what they expected, you might not just lose one sale. You could lose a customer and your brand may even suffer.

Supply Chain Dive writes that many factors contribute to the unexpected missing item. This includes scanning errors, unreported delivery mishaps, inventory shrinkage and more.

It’s impossible to avoid all of these factors all of the time. Retailers experience theft. Deliveries sometimes get lost. But you can improve your processes to avoid the “chronic out-of-stock syndrome.”

Data Frees the Captives of Stockout Syndrome

Whatever your business model, you have to know what’s going on with your inventory at all times. The more data you have at your disposal, the better position you will be to manage stock now and optimize stock levels in the future for all your sales channels.

Use your accumulated sales data to project optimum stock levels needed for a given period of time. Historic sales reports for discrete time-frames help tell you how much you need to keep on the shelf.

Once you know the optimum stock level you need to carry, keep your eye out for contingencies. The ability to see inventory in real-time lets you respond to changing circumstances. If you see that you are selling faster than expected, you will be in a position to respond. You can increase production or place orders with your suppliers to replenish your channels.