Are the Distributors Stocking Out of Products Very Often

Article Written By: zedast123

Product stockout, also known as out-of-stock is a very common phenomenon in retail environment, and more yet in consumer packaged goods, FMCG and over-the-counter products. Since these are the products with lower shelf-life, it is critical that their demand and sales is tapped properly and timely.

It has been observed that Stockout is quite a common challenge with retailers. They often struggle to keep products that customers want and need in stock. Temporary product stockout” gives them a hit on their sales. The major disadvantages of stockout are as follows:

When a customer cannot find your product and buys an alternate product, it is beyond just profit loss. It also means that your product that was supposed to be sold by now is lying as unsold inventory. If there isn t any real communication between your dealers/distributors and production planners, it can disrupt your next production cycle.

In case of festive or promotion schemes, you would have put extra bucks in mass production and distribution of products. So while you increase your marketing costs, you sure don t want the problem of stock-out to ruin your extra efforts and resources.

Product stock out has given your customer a chance to experience another product. This induces the risk of offering them the chance to perhaps forever stick to the product they happened to choose. So isn t a customer lost is customer lost forever?

There might be a sudden shift in consumer s preferences and the sale of a certain product may rise. This sudden demand can call for a product stockout. However, this can be a boon in disguise for the company. Adequate stock at the retailer could have offered them a boost in sales, which however could turn into lost sales in case of product non-availability.

Coherent sales forecasting could have helped to analyze the demand pattern and saved you from the lost sales. The sale of mosquitoes-repellant for instance, is bound to increase during monsoon weather. To ensure that your product gets a higher stance among your competitors, you need real-time business intelligence data about the inventory load in the market and also push your dealers/distributors to move out stock quickly.

Maintaining a right inventory stock requires an intelligent decision. Your dealers and distributors need to analyze the market and ensure that different variants/units of the product are available at the retailers. Customers are likely to choose a substitute product in absence of the SKU they need. Very likely, they may take another similar-in-attribute product.

It s important that all the high-selling SKUs are saved from stocking out. This is possible only with the availability of data that tells detailed SKU wise reports with area-wise dealers and distributors.

Inventory management becomes a tad difficult where multiple vendors, suppliers and retailers sell a product located geographically. With multiple entities, it is difficult to tap billing, product fulfillment time, minimum order requirements, etc. The solution for effective fighting the stock out is close liaison between dealers, distributors and retailers. This requires real time data sharing and sales forecasting. This means that the dealer and distributors must have accurate data of inventory, sales history, products reaching MSL (Minimum Stock Level), over stocked and obsolete products.

Stock-out is a prevalent problem and we see companies taking corrective actions once the problem of product stock out is busted. Isn t it better to take preventive actions and not let this situation occur? Because the ultimately, product stock-out lets manufacturer loose profit and possibly loyal customers.

The best, easiest and the most secure way is to keep a tab on the products as soon as they reach MSL identified by you. Such information, if shared in real-time, by dealers, distributors, sub-distributors and suppliers can save you a lot of hassles and get you an edge over your competition.

About the Author

Rakesh Kumar - Zed-Axis Technologies Pvt. Ltd A 360 Degree of distributor management software and sales tracking software

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