How to avoid running out of stock
Running out of stock can have detrimental effects on your
business, it could result in you loosing sales and hurting your brand trust.
Therefore, preventing out of stocks should be at the top of your list of
priorities. Here are the best ways to help you avoid running out of stock:
Forecasting and recording is important if you want to avoid running out of stock, especially if you have high velocity products that are on multiple online channels. You want to make sure you are reordering and receiving more products before you run out of them. By forecasting out you can use it to determine your reorder point based on your sales history as well as current order quantities and on on-hand quantities.
Even just recording can prevent stock outs, by simply having a re-order point and being notified when more products need to be stocked up on can help massively. This can be done manually or using warehouse management software like the one built in to our EPOS.
Either of these method will help you to constantly keep an eye on and know at all time exactly how much inventory you have so you can be ready to order more before you have the chance to run out of it completely.
They key to not running out of stock is to make sure your inventory is accurate at all time by organizing it effectively. Doing regular cycle counts will help you to do this because it means you can maintain and improve the state of your stock and your warehouse in general. The best way to cycle count effectively is to do it quarterly so less time is spent and make sure there is an order in which you are doing it through your warehouse and it becomes part of the daily routine for whoever is appointed to do it. This way nothing will be missed out and the results will be as accurate as possible.
Nearly all errors in stock come down to human error, which is why it?s extremely important to reduce this as much as possible. If someone counts the number of items you have wrong fro example, you could think you have more than you actually do and end up being out of stock. Therefore in order to keep your inventory accurate not only for preventing running out of stock but for re-ordering purposes as well you need to reduce as much human error as possible within your business. You should be putting things in place to make things quicker and easier for the person managing the stock.
A few ways in which you can do this are; scan items instead of typing or writing them in, use clear, concise labelling as this will help staff to easily distinguish between products and sections of your warehouse. You can also incentivise employees to help increase their productivity, whether it be through pay, an extra day off etc. anything that will encourage them to work harder to get the job done properly will reduce mistakes because they know their actions are being tracked. This will also help to increase efficiency, which is what every business should be aiming for.
Keeping tabs on trends in your market sector, whether its your products market or e-commerce as a whole will help you to prevent running out of stock. You should be looking for things like potential disruptions or any increases in demand as these can affect your sales. For example, if something starts to trend and loads of people are starting to buy a specific product the same as or similar to yours the likelihood is that you?re going to get more people than usual coming in to purchase it from you so it?s probably a good idea to order more of it in than usual. You can use things such as; general demand forecasts, updates from publications to provide insights into what to expect, especially during busy seasons like the holidays so you can best prepare and prevent any stock-outs.
You can also use historical data to predict purchasing trends, looking at previous sales reports to see the SKU?s (stock keeping unit) offtake on a daily, weekly or even monthly basis can be used to make predictions of the quantity of stock you need. You should also be able to determine from this when you will need certain items so can make more accurate decisions when ordering. Like mentioned above certain seasons and holidays can affect your stock so taking note of this will help you to expect highs and lows in demand. This data will also be able to tell you, which items are your bestsellers so you know that these are the items that make up the bulk of your sales and therefore more of them needs to be ordered compared to just general products. ?
When calculating how much you need to order, keep in mind that different suppliers have varying order to delivery lead times. Therefore, if one of your vendors has a particularly long lead-time, make sure you give enough time for it to come before running out so make that particular order earlier than others that have a shorter lead-time. It is a good idea to try to negotiate for a shorter lead-time with your suppliers as this will minimise the amount of inventory you need to keep in your warehouse, which will make it easier to manage.
Setting a minimum stock level will help you know when it?s time to re-order your items so you don?t run out of them. When determining your minimum inventory level you should base it on your projected sales quantity for a specific time period. One thing to note is that it should not be less than your supplier and production lead-time combined.
You can do this manually by keeping an eye on your stock and doing regular checks so when you get down to a certain number your re-order. However, a better way is to have? management system that used all of your sales transactions to determine how much stock you?ve got and lets you set a minimum stock level and when it gets down to this the system automatically puts an order in for you. This would mean a more efficient and less time consuming process as well as being a more accurate way of managing your stock levels.