Out-of-stock - SKU, which is not available, the absence of a supplier, distributor, or outlet.

The main reason of OOS is the incorrect calculation of the value of the minimum stock of products, which causes its shortage.

This may be due to:

products not ordered by the manager on time;
supply problems (the sales representative does not fulfill his obligations regarding the quantity of products and delivery time).

Consequences of out-of-stock:

Loss of profit: if there is an OOS for a specific item, then the store / producer simply cannot get the money from the client that he is willing to spend;
Loss of customer: in the absence of products, the customer chooses another store / another producer.
Loss of customer loyalty: If a product is out-of-stock regularly, the customer may permanently change the store or brand.

In order to quickly identify products that will soon be out-of-stock, we will use the "Prediction of OoS" report.

The functionality contains data on products the stocks of which will soon run short, and they need to be ordered in the near future. The report includes those products that form the main assortment (that is, they are consistently sold, at least twice a week).

Note! The report assesses the situation only in future periods.

Using an example, let's look at how to apply the "Prediction of OoS" report and do relevant conclusions.

Step 1. Generate a report for analysis

In the report table, select the following indicators:

Avg Sales Qty;
Sales Qty;
Stock Qty at the end of the day;
Date when stock became 0;



For example, set the period in the future 27.06.2021. (Current day 20.06.2021) and consider the situation with the product "Butter Traditional 73%".

According to the table revealed:

Over the last 28 days, Sales Qty of the product was 593 units.
The Avg Sales Qty of product per day is 19.39.
There are 55 units at the stock.
The date when stock became 0 is 27.06.2021.

Based on the Avg Sales Qty of products per day, we see that the stocks of products will be sold out in 2 days of the store's work. In the future, if proper measures will not be taken, this can lead to losses in sales due to zero stocks of this product.

Perhaps there are similar products in the chain and the client will buy another product, which minimizes lost sales. But it's important to prevent running out-of-stock, because out-of-stock of a slow-moving item doesn't have the same impact as out-of-stock items.

Step 2. Safety of supplying

The reliability of the supplier manifested in the fulfillment of the terms of the contract by the terms and quantity of the delivered goods. To analyze this characteristic, we select the following indicators:

Date when stock became 0;
Qty of last received products;
Date of the last received product;
Date of last order;
Qty of last order.



The period in the future is set on 27.06.2021. (Current day 20.06.2021).

The evaluation of the delivery for the product "Butter Traditional 73%" showed that the order (02.06.2021) and the receipt (03.06.2021) of the goods occur with a difference of one day. Therefore, by June 27, 2021. (the date when stock became 0) it is necessary to place an order in order to avoid “trade holes”. Such an analysis should be done by the most popular SKUs, or sorted by the date when stock became 0.

So, using the "Prediction of OoS" report, you can quickly identify products that need to be re-ordered as soon as possible. This will allow category managers to keep abreast of:

order items on time;
prevent losses in turnover;
optimize the interaction with suppliers;
create an "insurance" stock of the most popular SKUs.

Updated on: 02/05/2023