Stock-out is the worst nightmare for any business. They not only lead to lost sales, but out-of-stocks also result in poor customer satisfaction and lower loyalty levels. Customers often feel let down when you don't have what they're looking for, and the last thing you need is to disappoint them.

Stock-outs are the ultimate crusher of customer satisfaction; these supply chain pests must be avoided under any cost!

Availability issues sneak up on you when you least expect it. However, left unchecked, stock-outs can devour profits margins in just a matter of seconds. So what can you do to avoid them?

Let's discover the seven deadly sins you need to watch out for. By taking steps to avert the pitfalls of poor inventory management, you can ward off stock-outs to ensure a more profitable future for your business.


1.Poor forecasting

Forecasts form the basis for all decision making. And yet, many businesses depend on essential forecasts that lack the sophistication to reflect future demand truly. Without a robust forecast, stock-outs are inevitable. After all, how can you hope to achieve the optimal level of inventory to satisfy your customers with a forecast you can't trust?


 2.Supplier performance issues

Are your suppliers always letting you down? Did you find they are still late? Or do your suppliers fail to deliver exactly what was agreed? Supplier performance issues can not be ignored. And they indeed should not be accepted!



3. Volatile demand

Volatile demand is no excuse for availability issues. It would be best if you did everything you can to close the gap between forecasted and actual demand. After all, wherever there is a misalignment between supply and demand, this represents a cost. Where demand outstrips supply, the cost is a lost sale. Where supply exceeds demand, the cost is waste. Therefore, be vigilant and remain responsive to shifts in demand! Plan your demand: make sure the sales team knows which is running low and let them push alternatives.


4. Unreliable data

The importance of good master data cannot be understated! Yet how often does your system tell you you have plenty of stock on hand while the shelves remain empty?. Stock on hand, order volume, minimum order quantities, and lead-times as well all other key master data is correct and up to date, you are making important decisions in the dark! Without the above data it will be hard to prevent stock outs.


 5. Fire fighting

Do you find yourself fixing problems that should never have existed in the first place resulting in a sub-optimal way of working? After all, when you are putting out fires, you are distracted from doing anything else. The result: more stock outs!



6. Broken Communication

How many inventory issues could have been avoided if everyone had communicated a little better? While operations, sales, finance and management all have a vested in inventory, they often only speak when there is a problem. If everyone in the process we're engaged in open dialogue, many of the factors that cause stock-outs would be eliminated.


 7.Human Error

Even the most competent of inventory managers make mistakes. Whether these mistakes are made in a random moment of madness or are the result of poor knowledge, it only takes one missed or short order to impact availability!




It’s all too easy to succumb to the sheer complexity of modern supply chains. However, you must avoid these 7 sins at all costs.

After all, stock-outs not only have a direct impact on sales, they are often wrapped in hidden additional costs. As highlighted by the Association for supply chain management, the consequences of a stock-out don’t end there:

“Not only is there the cost of losing out on a sale, but there is also often an additional cost associated with having to process a backorder as well an administration cost to review the item and place another order.”

And this is all before you factor in the long-term costs of losing a customer!


But what can you do to mitigate the risk of stock-outs?

In reality, it will never be possible to avoid stock-outs altogether. There will always be some factors that you cannot foresee. However, there are steps you can take to drastically reduce stock-outs.

Given that poor inventory management is the common factor in all 7 of these deadly sins, this is your starting point on your optimization journey. The goal here is all about finding the perfect balance between working capital, operating costs and the optimal service level.

But to keep stock-outs at bay, you not only need robust process-based tools that support effective decision making, but your team must also have a complete understanding of how these decisions will impact the wider business.


Complete the form below to register for a personal one to one demo with one of our consultants and see how you can typically reduce stock-outs by as much as 50%!