{"id":2743,"date":"2017-10-09T10:45:17","date_gmt":"2017-10-09T17:45:17","guid":{"rendered":"https:\/\/www.microsoft.com\/industry\/blog\/uncategorized\/managing-inventory-and-the-out-of-stock-challenge\/"},"modified":"2023-05-31T16:44:17","modified_gmt":"2023-05-31T23:44:17","slug":"managing-inventory-and-the-out-of-stock-challenge","status":"publish","type":"post","link":"https:\/\/www.microsoft.com\/en-us\/industry\/blog\/retail\/2017\/10\/09\/managing-inventory-and-the-out-of-stock-challenge\/","title":{"rendered":"Managing inventory and the out of stock challenge"},"content":{"rendered":"
As a shopper, we\u2019ve all experienced it. Just when we find that perfect item, our store associate or online shopping cart breaks the news. It\u2019s not in the back. They\u2019ve run out of your favorite color. The size you want is unavailable. In other words, it\u2019s out of stock.<\/div>\n
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Stock out is a dreaded word\u2014for shoppers, consumer goods brands and retailers.<\/div>\n
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For consumers, it\u2019s frustrating to say the least and unfortunately an all-too-common occurrence. Currently one out of 13 items that a customer wants to buy is absent from the shelf.<\/div>\n
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For brands and retailers, the costs of stock outs are high, both for customer satisfaction and loss of sales. Only 15 percent of shoppers delay their purchase with more likelihood of shifting to another brand. And what\u2019s most significant for retailers is that successive out of stocks drive 70 percent of customers to a different store.<\/div>\n
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This translates to an estimated $129.5 billion in annual losses in North America alone, despite years of research and development to root out inventory problems.<\/div>\n
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With so much riding on effective inventory management, the obvious question is, \u201cwhy is this still happening?\u201d<\/div>\n

The main causes and impact of stock outs<\/h2>\n
There are many reasons why out of stock has become an Achilles heel for consumer goods brands. Some of it is self-inflicted, and some of it is caused by factors that are sometimes out of the brand\u2019s control as the out of stock trickles downstream into distribution and field sales channels very quickly.<\/div>\n
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The leading causes include imprecise demand forecast accuracy, inaccurate data management, low level accuracy for Perpetual Inventory (PI) System, inappropriate shelf-space allocation, and low planogram\/floor set compliance.<\/div>\n
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These stockout problems impair supply chain and sales and operations process management as a whole\u2014not just locally but on a global basis as well.<\/div>\n