The global economy has come a long way. We’ve seen industries create and meet demand, and the digital landscape in the retail world portends a plethora of opportunities every day. However, there’s one problem that the retail economy seems to be facing, and it is a recurring problem at that—running out of stock.
The Product That You’ve Requested Is Out of Stock!
We’ve all faced this issue as consumers—you go to the supermarket, look for a particular product, and the retailer says it isn’t available. Out of stock or a product, stock-out happens when the goods or inventories are exhausted. Fast moving consumer goods retailers face this problem the most, but it can occur along the entire supply chain as well.
Stock-outs can cost the industry a lot—research suggests that there is an average stock-out rate of 8% annually. To put it in simpler terms, one out of every thirteen items on the list of things that a consumer wants is unavailable or out of stock, costing the industry a loss to the tune of billions.
Following are some of the common causes for products getting out of stock, and how retail intelligence helps in tackling it.
Using an Inefficient Stock Keeping Unit
An SKU (Stock Keeping Unit) system is typically used to track inventory in a retail store. This system needs to be efficient. The numbers assigned to track the product and its variants, the price, and the manufacturing code all have to be accurate at all times. If there is any manual error or if the SKU malfunctions then, there is a problem.
How Data Intelligence helps: With Data Intelligence, managers and business owners can get a deeper insight into the available spaces in their warehouses. And so, they can plan accordingly and effectively for the incoming shipments, and make a call on whether they have to downsize or expand the warehouse.
Replacing Fast Moving Products
Fast moving products are to be regularly replaced—old inventories are changed and sometimes discontinued as well. Vendor and retailer records need to match exactly because when they do not, it paves the way for an out of stock scenario.
How Data Intelligence helps: With Analytics, the manager now has access to a detailed report, that includes details on which product sells the most. With such data, the manager or owner of the store can effectively increase the replacement frequency of such products.
Improper Management of The Demand Chain
This is another cause of out of stock situations. Demand chain management deals with suppliers and customers. Research shows that over 40% of out of stock events occur due to improper management of the demand chain and bad demand forecasting. The demand for a product is underestimated, so these products aren’t available in stock to meet this demand.
How Data Intelligence helps: It is imperative that the demand of the customers is accurately forecasted, based on historical demand patterns that are provided by Analytics, so that the products in demand can be stocked up on.
Phantom inventory can cause lots of loss. Products that are listed end up disappearing, and this can happen due to damage, theft or when the product is sold at too many places. This is where the perpetual inventory system comes in. Unfortunately, research shows that this system isn’t accurate enough to overcome a condition of phantom inventory. And one of the most common results? Your product inventory is out of stock.
How Data Intelligence helps: Based on detailed inventory reports that are included in Retail Intelligence, you can be sure that there would not be any kind of error in inventory metrics.
Delayed delivery of products by the supplier is a prevalent cause of stock outs. Ordering the right amount of supplies and good functioning of the stock keeping unit can amount to nothing if the vendor ends up delaying the delivery process. Lack of proper communication with the supplier can also be a major cause.
How Data Intelligence helps: With a deeper and collective insight on the delivery time taken for products sold in a given time, store owners can decide if they can continue with the same supplier or carrier.
Inferior Quality Products
When the supplier provides you with inferior products, you are forced to return the products, and this, in turn, results in the customer not getting the product he is looking for.
How Data Intelligence helps: From the available details about products from competitors, Retail Intelligence provides you information about the best suppliers in the landscape from which you can choose from. Retail Intelligence also includes price optimization software that helps in effectively selecting the right price for your product. This can impact your sales in a positive way and also to a large extent.
Finally, you can have a great inventory plan and strike off all the demand and supply needs, but if you don’t have a good management to implement these plans, you’re in for an out of stock event.
How Data Intelligence helps: With the help of detailed reports, managers can arrange staff schedules and organize the workload for each management unit so that there is proper functioning of the business.
Retail Intelligence—The Life Saver
There are a lot of world-class retail intelligence environments that help retailers to boost their visibility when it comes to inventory management. The best part about retail intelligence is that it keeps retailers informed with all the important metrics, and it also does that without hampering their daily operations.
Retail intelligence extracts information from a centralized repository, for example, an enterprise data warehouse. This repository has details of retailer metrics that are related to sales, production, supply chain, and internal operations.
By utilizing such data from the warehouse such as sell-through, inventory turnover, reeks of supply, gross margin return from the inventory, retailers can make better business decisions and never run out of stock. Retail intelligence improves data accuracy and quality helps in making better and fact-based decisions and managing inventory levels to avoid oversupply, lost sales, and out of stock issues.
With Retail Intelligence managers and owners can make timely decisions with data that is trusted by the entire business community.