A proactive approach to running out of stock – News Couple
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A proactive approach to running out of stock


Threatening to run out of stock

Over the past year, inventory-based companies have faced a tsunami of sseries of intense friction, forcing companies to scramble and strategize. And the entire world has faced a convergence of shipping problems – fueled by globalized communications, unparalleled lockdown levels, and massive economic pressures.

Out of stock One of the biggest threats to companies is that they rely on inventory on the shelves to meet customer service expectations. In fact, 42% of small to medium businesses report that running out of stock is their top inventory management priority. While losing one or two sales due to out of stock may not be a major concern, losing a customer has serious consequences for the business. Losing a customer can inadvertently strengthen your competition. Acquiring customers back after they move can be a daunting task.

So what causes out-of-stock to occur? The obvious answer is that the buyer did not order enough stock. But if the answer is that easy, then out of stock wouldn’t be much of a threat. There are a number of reasons that may lead to out of stock, Especially now during the chaos of COVID.

  • Underestimating the demand and consequently not ordering enough stock.
  • Late delivery from the supplier.
  • Inaccurate lead times, or lead times shorter than the actual delivery time.
  • On-demand due to a poor inventory management system or an unfortunate business decision.
  • Quality issues with ordered items that result in a high return rate to the supplier.
  • Supplier refused delivery due to account payment issues.
  • Lack of working capital that prevents placing the ideal quantity of the item.
  • Safety stock level(s) is too low.

proactive approach

Ideally, business owners should be proactive in managing the causes of stock outages. The ultimate goal is to prevent the problem before it occurs.

Tools: An inventory management system with a dashboard that highlights potential out-of-stock items for currently stocked items will help predict problem areas so your team can take action before the stockpile occurs. Additionally, the system should have a supplier order expediting feature that recognizes orders close to the expected delivery date and identifies overdue items.

the team: You have a team dedicated to maintaining forecasts based on market conditions. The more accurate your forecasts, the better able your inventory management system will be to forecast potential stock outs.

the operation: Low safety stock levels generally need to be addressed by management as it may require the team to raise service levels. Raising service levels requires investment. Management will need to evaluate the trade-off between fewer out of stock and an investment in additional stock. The inventory management system will calculate the additional investment in inventory required to achieve the required service level objectives. If potential inventory is identified, place emergency orders with suppliers or expedite existing orders to prevent these items from being in stock.

interactive approach

Out of stock can happen even with a very proactive inventory management team. Unexpected circumstances like weather or natural disasters (again COVID plays) can cause items to fly off the shelf at an unexpectedly fast rate. Here’s how to cope:

tools: An inventory management system with out of stock dashboards to identify current stock out is essential. The time stamp tool that appears when inventory occurs helps your team know how to prioritize and manage inventory.

the team: Assign a team member to handle and identify out of stock and take responsibility for solving the problem.

the operation: If inventory is limited, place an emergency order or purchase the item from a competitor. Rank the items with the highest losing potential sales first so that they are prioritized correctly.

Dealing with supply chain issues is an essential part of running an inventory-based business. But as these issues grow in size and complexity, it can be difficult to find what works for you. You don’t have to face chaos alone. StockIQ Provides the industry-leading supply chain management platform that is specifically designed for 3PLs and distributors. From world-class forecasting to S&OP planning, automated order creation, and rich replenishment features, StockIQ helps supply chain managers weather waves of disruption. call us To learn more.



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