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Out-of-stock (OOS) is something that retailers really do not want to hear and for good reasons too. Most shoppers if they do not find the brand they are looking for in a store will seek the next best substitute or not shop at all. This implies that as a manufacturer, you do not sell, also customers loose loyalty in your brand and try to satisfy their needs with different brands. Stock-outs should be avoided and this is possible if manufacturers know the reasons for which they occur. There are many ways to prevent a stockout which apply to manufacturer and retailers, and hence they do not disappoint their customers, they are as follows.

Maintaining An Accurate PI System

A retailer’s Perpetual Inventory (PI) system is a significant cause of stock out since it drives the quantity and interval in which a product should be ordered. Inaccurate PI data causes the lack-of-stock to occur, and human error mainly causes this inaccurate data. A practical solution should be established, one that identifies errors in the PI system hence they are solved before creating an OOS situation. The answer should be an exceptional intelligence system that has the ability to determine the cause of an error as well as coming up with corrective action.

Checking Future Out-Of-Stocks

Future OOS can be averted by converting the focus from On-shelf Availability (OSA) triage to prevention. Through prevention, the root cause of product outage is identified and used to manage the percentage of available products on shelves. Manufacturers can collaborate with retailers through the use of a cloud-based supply chain management system to identify, track, understand and act upon the primary cause of OOS. This will not only maximize profitability but also synchronize the supply chain.

The best way to manage OOS proactively is by initially identifying and understanding the root cause of the situation. Through root cause analysis the key goal of identifying why and where the problems are occurring is achieved. This method will help determine which store the OOS happened, whether the outage happened during a particular sale event, or whether there was a new advertising campaign or product launch.

After the completion of stock out analysis, the principal cause of OSS is identified and the data is used to prevent future stock outs from occurring.

Adopting a Cloud-Based SCM System

Determining the critical cause of stockouts is dependent on data since the situation should be precisely understood, a rich and more granular data set is needed. This also implies the resulting preventative measure will be more accurate in preventing OOS.

A proper SCM system should be connected to the entire supply chain to have desired results. Even though most SCM systems can optimize a local function, they are mostly built to optimize a distinct and discrete function.

Through a cloud-based SCM, the manufacturer receives data necessary for measuring and managing OOS. SCM systems also allow manufacturers to view inventory levels in addition to measuring and comparing actual sales to expected sales in real time. This will identify any gaps which are then analyzed, and their origin can be determined. If a product outage occurs, it gets flagged in the system, and a sequence of action take place to correct this gap.

Improving Retail Insight At Point Of Sale

Acquiring vital information about a product from a point of sale will go a long way to help avoid OOS and overstocking. Even though a cloud-based SCM system provides access to such current vital information, this can be a fundamental tool when the cloud-based system fails.

Point of sale information can be used to get an insight in how the consumer thinks, and the data will be used to personalize the in-store shopping experience of the customer. Also, it will increase consumer engagement and loyalty. 

Implement Demand Forecasting

Demand forecasting implies merely anticipating demand for a product so that number of orders as well as when to order can be determined. A manufacturer can forecast demand by use of past sale information and when such sales took place and other components such as promotions, economic state, seasonality, etc. These numbers will give the manufacturer an idea of how a product will perform hence avoid stock-outs.

By implementing a proactive approach to shelf availability, manufacturers get to avoid massive losses and loss of customer loyalty. Through the use of an efficient, scalable, repeatable, collaborative and cost-effective procedure, manufacturers can prevent damage to the food firm. This will furthermore benefit both the retailers and the customers since retailers get to make sales while customers’ needs get satisfied.

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