Reducing Distribution Center (DC) Stockouts

It’s never ideal when a customer wants to purchase an item that isn’t in stock. While you can always place an order and call the customer when it arrives, the customer has to wait — and in our society where convenience is king, that can have serious consequences for your business.

Stockouts can result in a bad customer experience, causing lost sales, negative reviews and customer attrition. It can damage your brand and reputation — and in the long run, it can hinder your business growth.

What Causes Stockouts?

Clearly, stockouts need to be avoided at all costs. But before we examine how to avoid them, we need to understand why they occur.

Whether it’s employees reporting incorrect sales numbers or managers making mistakes when stock taking and filling out spreadsheets, inaccurate data inevitably results in poor decision-making and negative business results. Without accurate data, you don’t know how many items you have left in stock, how well a product is selling and how many more units you need to order to meet demand.

If you order too many items, you’ll wind up with waste — and most likely have to mark down those items to sell them. And if you order too few, it will result in a stockout — along with unhappy customers and lost revenue.

How to Reduce Stockouts

So how can you reduce stockouts? Keep the following tips in mind:

  • Have a safety stock inventory: It’s always advisable to order a small amount as surplus in case of mistakes with reordering or other problems in the supply chain — like delivery delays. When your regular stock runs out, you can draw on your safety stock inventory to meet customer demand until the next full order comes in.
  • Forecast demand: Analyze historic sales data — along with any seasonal spikes — to estimate how many items you’ll sell in a specific period of time. Then, you can order accordingly.
  • Implement cycle counts: Regular cycle counts ensure you have visibility over your inventory and minimize the chances of mistakes — and subsequent stockouts. Ensure that the cycle counts are performed by trained employees who understand your inventory system and are able to recognize irregularities and errors.
  • Track sales with radio frequency identification — or RFID — tags: These tags will allow you to quickly scan the items you have in store so that you can see in real time how many you have in inventory.
  • Leverage warehouse management software: Using cloud-based warehouse management software, you can track sales and update inventory in real time. In addition, you can set up automated reorder points so that your stock is always replenished when needed.

Prevent Stockouts With Clients First Business Solutions

To effectively reduce stockouts — or even eliminate them completely — you need robust warehouse inventory management software that can accommodate your specific needs. For example, you have to be able to enter a wide range of dimensions, weights, manufacturer names, SKUs and prices. In addition, the software needs to provide full visibility of your entire supply chain and integrate with your front-end business system.

Selecting the right warehouse management system software can be challenging. That’s why you’re best advised to work with knowledgeable consultants — like the team at Clients First Business Solutions — who can advise you on the right choice, help implement the system and provide ongoing support in case you run into any issues. For more information, contact us today.

2019-05-01T06:22:56+00:00 April 26th, 2019|General ERP articles|Comments Off on Reducing Distribution Center (DC) Stockouts
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