Among the list of issues retailers face, out-of-stocks are likely to be among the worst ones many actively try to avoid. This is for a good reason, as not only do out-of-stocks mean lost sales, but they also lead to dissatisfied customers that could significantly impact their loyalty levels.
However, experiencing the unexpected stockout here and there happens to all retailers at some point and can be a learning point to improve one’s processes. In addition, there are plenty of solutions that can prevent them from happening to you in the first place.
Below, we go over four common causes of this glaring issue and the tips to sidestep them.
Data inaccuracies
It is easy to encounter inaccuracies when managing inventory. Between misplaced products, shipment variances, stolen goods, and returns, retail owners may find discrepancies in their data on paper (or screen) and what they have in storage. Such inaccuracies can give merchants the impression that they still have plenty of stock when the truth is that they do not, which can cause further issues like re-ordering the wrong quantities or products.
There are plenty of ways to tackle this problem, but your inventory system is the first one to look into. In today’s fast-paced business environment, the traditional way of using pen and paper should be replaced with a modern and cloud-based POS system, which is guaranteed to help accurately track products in an efficient and error-free process.
Ideally, retail owners should look into implementing a POS system with an automated modification feature that updates inventory levels whenever the store rings up a sale, eliminating the need to manually update the database. Moreover, these kinds of retail-focused capabilities can also bring significant advantages for owners with several locations since one can manage multiple branches more easily.
Poor relationship or communication with suppliers
The next factor is the brand’s relationship with its suppliers. Out-of-stocks often arise from the failure to effectively communicate or deal with suppliers, which causes delayed or even missed orders. Naturally, retail owners should work on their communication with suppliers and make sure both parties are on the same page. This means getting all orders and deadlines on paper, promptly informing them of any relevant issues as soon as possible, and more.
Another thing to consider is sharing data and forecasts with vendors to facilitate product ordering and schedules. Since imperfect product forecasting is one of the main reasons for problems with supply chain relationships, retail owners should spare no effort to improve their tools and processes to keep suppliers informed about the merchandise they need.
Inadequate staff training or processes
Despite having robust tools and concrete inventory plans, stockout issues can persist if employees are not knowledgeable about implementing them. This is where adequate training becomes all the more important. Training allows staff members to become proficient at working with the available tools, as well as educates them on the significance of certain data or insights and how to use them.
Furthermore, look into your store’s current processes and see if it is detailed enough. A well-defined process entails that all employees know their role in managing inventory, from replenishing the shelves to those responsible for re-ordering products. When everyone is on the same page, staff can correctly implement the store’s inventory workflow and reduce the odds of out-of-stocks happening from an internal level.
Supply chain issues
From current lockdown restrictions to port congestions and other global events, it is well-known that supply chain issues are causing shipment delays to virtually every business out there, not just those in retail. Since not much can be done to combat these large-scale problems affecting international factories and suppliers, retail owners can only look to minimise delays and losses in a few ways, such as engaging backup suppliers or sourcing locally. Sourcing locally means engaging more with regional suppliers and seeing if they can provide the items on your catalogue. Another option is to stock alternative products until the supply chain issues are resolved.
Conclusion
Being out-of-stock on certain items does not only equate to disappointed customers, but also missed sales opportunities, both of which have a direct effect on the store’s bottom line. When these products, especially the popular ones, are not readily available, retailer managers regrettably leave customers no choice but to take their business elsewhere. And while completely eliminating the risk of out-of-stocks is not feasible, store owners can always be proactive in their inventory management to reduce the chances of it occurring.
An effective solution for inventory management is to invest in a reliable POS system with a robust inventory management module. At Edgeworks Solutions, you can find a tailored retail POS system in Singapore, allowing you to better manage your stock inventory. This goes for our restaurant POS system in Singapore as well, alongside for other industries. If you are a business owner and would like to learn more about our POS solutions, you can reach out to us here.
