Are The Dealers & Distributors Stocking Out Of Your Products Very Often

By Author: Rakesh Kumar
Total Articles: 33
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One of the most unfortunate instances of losing out on sales is product stock-out. Non-availability of your product very naively shreds you of a potential sale and gives your competitors a free-hit.

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:

Disrupts Production Planning - 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.

Hits the Production Finances - In case of festive or promotion schemes, you would have put extra bucks in mass production & 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 & resources.

Risk of Losing out Permanently to Competition Product - 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?

Now that we know few of the prime reasons why product stock-out is a critical problem in sales, let us discuss some of the reasons attributed to stock-out:

Consumer Preferences Change - 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.

Preference for an SKU - 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.

Multiple Vendors and Suppliers - 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 [Minimum Stock Level] 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.

Rakesh Kumar is an after-sales service process optimization expert and associated with Zed-Axis Technologies Pvt. Ltd & Zed-Sales? - A 360 Degree of sales management software & sales tracking software - one of the flagship products of Zed-Axis Technologies Pvt. Ltd. For any queries/feedback Please visit www.zed-sales.in