Out-of-stock inventory can be a serious drawback for your business. When you run out of items, customers may go somewhere else instead of waiting for your stock to be replenished. Out-of-stock inventory also disrupts the flow of your warehouse fulfilment process, as orders cannot be completed without the required items being available. Depending on the type of warehouse you operate, this can lead to serious problems in terms of staff efficiency and customer satisfaction.
Warehouses For Order Fulfilment
There are several types of warehouses that businesses use for fulfilment purposes:Â
Warehouse Fulfilment Centers (WFCs)
WFCs are large facilities that store a wide variety of products in bulk quantities. WFCs are useful for businesses that need to move inventory quickly, but they can also be subject to out-of-stock issues if there is not enough product available at any given time.
Regional Distribution Centers (RDCs)
RDCs are smaller warehouses located in strategic locations around the country or world. They stock smaller amounts of inventory than WFCs and are primarily used for shipping items to specific regions or countries. As with WFCs, out-of-stock issues can still occur if there is not enough product in the RDC at any given time.
Cross-Docking Warehouse
Cross-Docking warehouses are facilities that allow for goods to be quickly moved from one mode of transport to another, without the need for long-term storage. This helps businesses reduce costs by eliminating the need for large inventory stockpiles, but it also means that there is no buffer against out-of-stock issues. If a particular item runs out of stock in the source location, it will not be available until more is received from the supplier.
Best ways to avoid out-of-stock inventory situation
Whether you’ve got a small business or a large-scale business set up, the out-of-stock situation can pose a lot of challenges. Read on to understand how to avoid an out-of-stock inventory situation.
Keep an Accurate Inventory
The first step to avoiding out-of-stock inventory is to keep an accurate inventory. This means knowing how much of each product you have in stock at all times and being able to track when products are sold. There are a number of ways to do this, including using barcodes, scanning devices, or manual inventory methods.
Use a First In, First Out (FIFO) System
Another way to avoid out-of-stock inventory is to use a first in, first out (FIFO) system. This system ensures that the products that have been in your inventory the longest are the ones that are sold first. This helps to prevent products from expiring before they can be sold.
Set Reorder Points
A reorder point is the point at which you need to order more of a product to restock your inventory. Setting reorder points helps to ensure that you never run out of a product and that you always have enough in stock to meet customer demand.
Use Automatic Replenishment Systems
Automatic replenishment systems can help to take the guesswork out of restocking your inventory. These systems use data from your sales history to automatically order products when they reach a certain level. This helps to ensure that you always have the products you need without having too much in stock.
Monitor Sales Data Closely
Monitoring your sales data closely can also help you avoid out-of-stock inventory. By tracking which products are selling and when you can better predict when you will need to restock your shelves. This information can also help you make decisions about which products to keep in stock and which ones to discontinue.
Have a Backup Plan
No matter how well you plan, there will always be a chance that something could go wrong and you could end up with an out-of-stock situation. For this reason, it’s important to have a backup plan in place so that you can still meet customer demand even if something does go wrong. This might involve having a relationship with a supplier who can provide emergency shipments or keeping extra inventory on hand so that you can quickly restock your shelves if necessary.
Communicate With Your Customers
Finally, it’s important to communicate with your customers about any potential out-of-stock situations. If you know that a particular product is going to be out of stock for an extended period of time, let your customers know so that they can make alternative purchase plans if necessary.
Final Thoughts
Out-of-stock inventory can have serious repercussions for businesses, as it affects both the efficiency and satisfaction of customers. To prevent this from happening, businesses need to take proactive measures such as better inventory tracking, stocking more items in warehouses, and having reliable suppliers. By doing so, they can ensure that their customers get the items they need when they need them.