If you’ve ever gone to a store only to find that they’re out of the product you were looking for, you’ve experienced a stockout.
Stockouts can be frustrating for customers and costly for businesses. They’ve also spiked in frequency thanks to delays in shipping caused by the pandemic.
A stockout is even more detrimental for eCommerce businesses. If someone leaves your website because of a stockout and finds their product on a competitor’s website, you may have just lost out on that customer forever.
In this article, we’ll explain what stockouts are and how businesses can avoid them.
What Are Stockouts?
A stockout is when a store or other business runs out of a product that it typically carries.
Stockouts can be problematic for businesses because they lead to lost sales. When customers can’t find the products they’re looking for, they go to a competitor’s store instead. In some cases, they may even buy a different product altogether.
Stockouts can also lead to customer frustration and a decline in customer satisfaction.
How To Avoid Stockouts
There’s a delicate balance between managing inventory and sales but it can be done with proper planning. There are several things businesses can do to avoid stockouts. These include:
Keep Tabs On Inventory Levels
Keeping track of your inventory levels ensures you’ll know when you need to reorder products to avoid running out of stock.
You can track inventory using a physical count system. This involves counting the inventory on hand periodically and comparing it to the records. You can also use a perpetual inventory system. This system uses technology, like barcodes, to track inventory in real-time.
Some businesses employ a hybrid system. This combines both physical counts and perpetual inventory systems.
Use Data To Predict Demand
Use your sales data to help you forecast how much of a product you’ll need in the future and order accordingly.
You can do this by using your point-of-sale data, your historical sales data, market research, or even customer surveys to predict shopping patterns.
Once you have this data, you can use it to create demand forecasts. This will help you estimate how much of a product you’ll need in the future and avoid stockouts.
Have A Backup Plan For Unexpected Spikes In Demand
Even if you’re good at forecasting demand, there may be times when you experience an unexpected spike in demand. This could be due to a sale, a new product release, or even something like a natural disaster.
When this happens, it’s important to have a backup plan in place. That way, you can avoid running out of stock and losing sales.
One way to do this is to keep safety stock on hand. This is extra inventory that you keep on hand in case of spikes in demand.
Another option is to use just-in-time ordering. This is when you order products from suppliers as you need them, rather than keeping large amounts of inventory on hand. This can help you avoid overstocking products and wasting money on storage.
Use Technology To Automate Inventory Management
There are a few different ways to use technology to automate inventory management.
Firstly, you can use barcodes or RFID tags to track inventory levels. This way, you can always know how much of a product you have on hand. Take this a step further and install inventory management software to keep track of inventory levels and demand forecasts. This way, you can quickly reorder products when necessary.
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We’ll combine a number of steps in your distribution chain to make the delivery of your products more cost-effective. Click here to find out how we can help you eliminate your stockout costs.