It's a popular saying among many retailers and supply chain vendors: "Stock-outs cause walk-outs."
According to the Harvard Business Review, retailers find "out-of-stock" notices just as frustrating and annoying as shoppers. However, whereas consumers may find a substitute for the out-of-stock item, delay their purchase until merchandise is back in stock, or find another retailer selling the item, the brand in question loses out on an opportunity to make a sale.
And these missed opportunities can rack up considerable losses for brands: CNBC found that in 2015, retailers lost a staggering $1.75 million due to out-of-stock, overstocked and returned items.
Worse still is the fact that most stock-out situations are created not by issues higher up in the supply chain, but due to poor inventory management and replenishment practices on the part of retailers.
Thankfully, there are a few key strategies organizations can leverage to help them avoid the dreaded "out-of-stock" notice, keep their customers happy and avoid missed sales. Let's take a look:
1) Know which items are the highest sellers
One of the first steps to take here is to boost visibility into the business's overall inventory. Nearly every company has a handful (or more) of best-selling items, the critical merchandise that they just can't seem to keep in stock. It's important for stakeholders to know which items fall under this category, and to prioritize inventory management around this merchandise.
The use of advanced technology can be of particular benefit here. As POPfuel pointed out, some stock-outs happen because of manual entry errors or a lack of visibility and understanding into inventory demand patterns. An innovative inventory management system can help tune stakeholders into these patterns and help them take action before high-selling merchandise is out of stock.
"[Out-of-stock] trends can be tracked using your inventory management software," POPfuel stated. "When you're regularly auditing your inventory and understanding trends, you'll never miss the boat (on restocking) again."
2) Leverage low stock alerts
Another strategic way to improve inventory availability is to utilize the inventory management software to set up low stock alerts. This software is very customizable, and enables users to create their own benchmarks for alerts. In this way, stakeholders are able to proactively reorder and maintain appropriate stock levels before they run out of customers' favorite items.
3) Consider putting aside a buffer
It can also be helpful to set aside a specific cache of your highly in-demand items, separate from your regular stock. This "buffer" inventory can come in very handy when the warehouse or retail store is nearly or completely out of items, but loyal, repeat customers are still putting in orders.
Out-of-stocks are something that impact almost every business, no matter what products they specialize in. And while these are surely frustrating, they can also result in missed opportunities for customer connections and profit growth.
The best way to fight stock-outs and avoid walk-outs is to leverage the power of an advanced order and inventory management solution, that comes equipped with advanced product availability and allocation features.
To find out more about how this type of solution can help your business, connect with us at SFG today.