Stockout

A stockout, or out-of-stock (OOS) event is an event that causes inventory to be exhausted. While out-of-stocks can occur along the entire supply chain, the most visible kind are retail out-of-stocks in the fast-moving consumer goods industry (e.g., sweets, diapers, fruits). Stockouts are the opposite of overstocks, where too much inventory is retained.

Extent

According to a study by researchers Thomas Gruen and Daniel Corsten, the global average level of out-of-stocks within retail fast-moving consumer goods sector across developed economies was 8.3% in 2008.^[1] This means that shoppers would have a 42% chance of fulfilling a ten-item shopping list without encountering a stockout. Despite the initiatives designed to improve the collaboration of retailers and their suppliers, such as Efficient Consumer Response (ECR), and despite the increasing use of new technologies such as radio-frequency identification (RFID) and point-of-sales data analytics, this situation has improved little over the past decades.^[2]

Causes

Recent surveys on retail out-of-stocks suggest that instore operations are fundamental to reducing retail out-of-stocks.^[3] Around 70-90% of stockouts are caused by defective shelf replenishment practices, as opposed to the 10-30% resulting from the upstream supply chain, such as a shortage of supply from a supplier.^[4] This broad knowledge offers retailers the opportunity to improve on-shelf availability through internal measures. However, it requires a detailed understanding of the causes of out-of-stocks.

A shortage of working capital may limit the value of orders that can be placed each month. This could be caused by poor cash flow management or other inventory issues such as too much cash tied up in high levels of excess.

Shopper response

Stockouts frustrate shoppers and force them to take a number of corrective actions that are beyond the retailer's control. Understanding how consumers respond to stockouts is therefore the starting point for retailers who wish to improve on-shelf availability.^[5] When shoppers are unable to find an item that they had intended to purchase, they might switch stores, purchase substitute items (brand switch, size switch, category switch), postpone their purchase or decide not to buy the item at all.^[6] Although these responses differ in severity, each entails negative consequences for retailers. Stockouts cause lost sales, dissatisfy shoppers, diminish store loyalty, jeopardize marketing efforts, and obstruct sales planning, because substitution disguises true demand. Moreover, shopper surveys reveal stockouts to currently be the most prevalent annoyance to shoppers. Shoppers spend a considerable amount of time looking for and asking for out-of-stock items.^[7] Shopper response to stockouts has been investigated by researchers with respect to cognitive response (e.g. perceived availability), affective response (e.g. store satisfaction), behavioral response (e.g. brand switching) and aggregated response in terms of category sales effects.^[8] Studies find shopper response to out-of stocks depends on brand-related antecedents (e.g. brand equity), product and category-related antecedents (hedonic level), store-related antecedents (e.g. service or price-oriented), shopper-related antecedents (e.g. shopper age) and situational antecedents (e.g. purchase urgency).^[9]

Impact

Depending on the shopper response to an out-of-stock, manufacturer and retailer incur various losses.^[10] Both manufacturer and retailer face a direct loss of the potential sale when a consumer faces an out-of-stock because the shopper purchases the item at another store or does not purchase it at all. Additionally, when a substitution is made, the retailer also loses an additional portion of the potential sale because the shopper tends to switch to smaller and/or cheaper substitutes.^[3] In addition to the direct losses, both the retailer and the manufacturer incur additional indirect losses due to decreased customer satisfaction that results in less overall reliance on the particular retailers and brands. When an out-of-stock leads to purchase at another store, this provides the consumer an opportunity to try a different store. Consumer behavior theory argues that trial precedes adoption, and, thus, an out-of-stock sets the stage for possible permanent store switching. When an out-of-stock leads to purchase of a competing brand, the consumer trial can lead to possible permanent brand switching as well.^[3] Research findings show that a typical retailer loses about 4 percent of sales due to having items out-of-stock. A loss of sales of 4 percent translates into an earnings per share loss of about $0.012 (1.2 cents) for the average firm in the grocery retailing sector, where the average earnings per share, already is about $0.25 (25 cents) per year.^[3]

소매 아웃소싱 식별 및 감소

재고 수준을 파악하면 재고 부족을 줄일 수 있다.^[11] 기존 방식은 매장에 대한 수동감사를 실시하고 진열대에서 수동으로 '갑'을 찾는 방식이다. 판매 속도 및 보충 일정이 다르기 때문에 수동 재고 조사의 효율성은 그 빈도와 시기에 따라 크게 달라지며, 사람 계산 오류가 발생하지 않도록 해야 한다.^[3] 두 번째 방법은 판매 시점 데이터 또는 더 구체적으로 스캐너 데이터를 사용한다. 과거 판매 데이터를 바탕으로 판매 간 지연 기간을 선반 위에 물건이 있는지 여부를 가늠하는 척도로 삼는다. 그것은 탄산음료 캔과 같이 빨리 팔리는 소매 품목을 조사하기 위해 선호되는 방법이다.^[12] 재고 부족은 정확도에 따라 재고 데이터를 사용하여 확인할 수도 있다.^[13] 마지막으로 RFID, 선반 스토퍼, 중량 또는 조명 센서와 같은 다양한 종류의 기술을 사용할 수 있다. 그러나 이러한 기술은 지금까지 소매품목의 상태(예: 손상되지 않은 라벨)를 감시할 수 있는 장비를 갖추고 있지 않다.

원천

See also

• Backorder
• Cannibalization
• DMSMS
• Just in time (business)
• Reproductive Health Supplies Coalition
• Safety stock
• Service level