Glossary

Stock-Outs

Stock-Outs refer to the number of times a product is out of stock when it shouldn't be, leading to lost sales and customer dissatisfaction.

Background square

What is Stock-Outs?

Stock-Outs refer to the number of times a product is out of stock when it shouldn't be, leading to lost sales and customer dissatisfaction.

How to calculate Stock-Outs?

Stock-Outs = (Total number of times a product is out of stock / Total number of orders)*100

What is the business impact of Stock-Outs?

Frequent stock-outs can lead to lost sales, damage customer relationships, and negatively impact brand reputation.

Industry benchmark for Stock-Outs

Ideally, the stock-out rate should be as close to 0% as possible.

Although in many industries, the average stockout rate is about 8%, and it rises when products are on sale.

How to improve Stock-Outs?

  • Improve demand forecasting to estimate the exact inventory requirements.
  • Regularly review inventory levels and monitor how it relates to the demand.
  • Implement a robust inventory management system.
  • Utilize an automated replenishment system based on reorder points and lead times.
  • Incorporate a vendor-managed inventory (VMI) system for critical items.
  • Implement a real-time tracking system to monitor stock levels accurately.