5 Causes of Out of Stock of Goods and How to Overcome Them

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5 Causes of Out of Stock of Goods and How to Overcome Them

5 Causes of Out of Stock of Goods and How to Overcome Them

5 Causes of Out of Stock of Goods and How to Overcome Them

Out of stock is a condition that retailers always want to avoid. Not only does it lead to lost sales, but running out of stock can also decrease customer satisfaction and their level of loyalty. Your customers will feel disappointed when you don’t have what they’re looking for.

Fortunately, there are several solutions to out-of-stock problems. There are many causes of out-of-stock items that can be prevented if you understand your business and products and improve the operations in your store.

Here are the 5 most common causes of out of stock and how to deal with them.

1. Inaccurate Data

You likely encounter data inaccuracies when dealing with inventory. The data that is on paper (or on the screen) often does not match the actual conditions, be it product variants, wrong placement, products returned, and so on.

The difference in data can disrupt your business operations. For example, the data on the screen shows that you still have sufficient stock for product A, even though conditions in the field for product A are out of stock or out of stock.

Or vice versa, product A runs out according to data on paper, even though it still has a lot of stock in the warehouse. When you only rely on data on paper, you may add to the stock of product A, and you know what will happen next.

So, make sure that the data you have is following the conditions in the field. Carry out regular stock-taking to prevent you from data discrepancies.

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2. Not Adding To Stock Goods On Time

The problem is quite simple: your product sells quickly, while you always run out of stock because you don’t add stock in time. This leaves you unable to keep up with customer demands, and ultimately frustrates them.

There are several ways you can prevent it, starting from observing patterns when the stock is always running out, predicting demand for goods for the future based on the data you have, and observing trends in your customers.

By observing patterns, predicting demand, and observing trends, you will avoid out of stock problems.

3. Poor Management of People, Processes, and Technology

You can have sophisticated tools (software) and a solid inventory plan, but if you don’t have the right employees to implement them, you will still have problems running out of stock.

For example, let’s say you have enough stock in your warehouse, but if your staff doesn’t regularly refill the shelves at the store, customers will assume that you don’t have what they’re looking for.

As another example, you have an inventory system that can provide great insights, but if your employees don’t know how to interpret the data, they won’t be able to make good use of the information.

4. Poor communication or relationship with your supplier

Failure to engage or communicate effectively with suppliers can result in your order being missed or delayed, which in turn can cause you to run out of stock.

For starters, improve your communication with the supplier. If a product sells faster than expected, don’t wait until the stock is low. Immediately contact your supplier, then plan your next order.

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5. Insufficient Working Capital

Some businesses run out of stock due to a lack of funds to purchase new inventory. If this happens to you, then you need to find a way to cash out your invoice immediately. Call and remind them of unpaid invoices.

Make sure you have a cooperation agreement regarding the invoice payment mechanism, including about what if your customer is late in making payments.

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