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3 Ways to Combat Lost Sales Due to Stockouts

3 Ways to Combat Lost Sales Due to Stockouts

CEO & Co-Founder at Flieber

If you’re here, you know your inventory mistakes are costing you a lot more than lost or deferred transactions.

Inventory constraints like low inventory, stockouts, and overstocks, can do long-term damage to your margins and future sales. For some, it can take weeks or even months to recover from a single miscalculation in your forecasts.

So, how do you fix it? The solution to inventory problems doesn’t stop at better forecasting. It’s a combination of better planning, better visibility, and quick course correction.

Let’s break it down.

1. Better planning

You’ve heard the old saying: failing to plan is planning to fail. 

The same is true for your inventory. To make better inventory decisions in the future, you have to know what happened in the past.

Focus on the following three areas in your inventory planning:

  • Better data: No forecast is ever 100% correct, but feeding your calculations or algorithms with clean and accurate data highly improves results.
  • Better processes: When you sit down to make a purchase or transfer, do you have a clear view of your current inventory and how it's planned to be consumed by your sales channels? This is critical in the planning process.
  • Better decisions: With better data and processes, you can base your sales decisions on your current and future inventory availability, and make sure that you always have in stock the ideal quantities of each one of your products.

As much as we all love Excel, it’s easy to outgrow spreadsheet-based inventory processes, especially when you’re actively adding new products and channels.

To reduce lost sales and free up working capital, you need an inventory system that considers all your sales channels and gives you full visibility into past, present, and future inventory levels.

2. Visibility

If there’s one thing we know about inventory, it’s that sh*t happens. 

You may already be using an inventory management system (IMS) to track your inventory levels and a purchase order management system (POM) to track your inventory in transit, but few retailers have a repeatable way of aligning that data with their sales forecasts in real time for better decision making in the day-to-day.

To protect your sales and margins, you need to understand what's happening with your inventory at any given time, so that you can identify issues before they become a problem.

A high-visibility inventory platform shows you:

  • Current inventory positions: How much stock you have on hand, how much you have on order, and your current sales pace in each channel.
  • Future inventory consumption: Including all variables: current stock, on order stock, sales forecast, intermediate stockouts, and ideal points of replenishment.
  • Future stockout alerts: Allowing for as much advance notice as possible when a potential stockout is identified.

When you’re scaling quickly, you don’t have time to jump in and out of your IMS, PMO and countless other systems before placing your next PO or TO.

With a high level of visibility, you’ll know in advance what will happen if no action is taken. And with alerts in place in case anything goes wrong, you can put more of your operations on autopilot without sacrificing your peace of mind.

By arming yourself with a clear view of what will happen in the future, you’ll always know what to do at any given time to keep sales on track.

3. Course correction

Last but not least, it’s time to take action.

When I first met Rachel Gutierrez, she and the team at Bom Dia brand had just reached the $1 million mark on Amazon. Not too long after, Covid hit.

Suddenly, everyone was ordering coffee online. Flieber alerted Rachel and her team to speed up their replenishment to meet the increased demand. When their factories couldn’t keep up, they started receiving alerts to reduce their sales pace, which Rachel did by increasing prices and reducing ads.

The result was an astonishing leap from $1.5M to $6 million in annual sales in just one year, all while improving their margins.

Their inventory planning process worked because it showed Rachel exactly what would happen if they executed any of the actions available:

  • Order more items
  • Increase price
  • Reduce ads

Of course, different businesses will have completely different goals in course correction. 

For a perishable goods brand like Bom Dia, the goal was to avoid holding too much inventory, while keeping pace with the increase in demand. For an electronics brand, for example, it might be more important to use your inventory to decide when to discontinue an item to avoid dead stock and overstock while protecting your Amazon rankings.

No matter how you run your business, your inventory platform should make it easy for you to adjust your lead times and consumption per channel for a real time clear picture of how your inventory is impacting your growth.

Fix lost sales through better inventory planning

Better planning means more sales. And it doesn’t happen overnight.

But with a customizable inventory planning platform like Flieber, you can plug in your data and start taking action to protect your bottom line.

Flieber’s Replenishment Simulator gives you exact dates for when and how your inventory will be consumed so that you can make better decisions about when to order more, rush a shipment, or slow the sales pace on a specific product. 

With quick scenario planning and real-time alerts, you always know what’s going on with your inventory. Try Flieber today to learn more.

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