Eliminating Inventory Out of Stocks

What a controversial topic! I've worked with many outstanding leaders in the inventory/fulfillment world. We have all been obsessed with making this problem better. To level-set, "out of stocks" are defined, for the purpose of this article, when the customer-requested item is not where and when the customer wants it. You do have the power to reduce the likelihood of an out of stock customer situation. It also does not mean you should just purchase more units -- there are less costly alternatives to that.

First, let's start with what is the customer experience for an out of stock. Here are two common customer experiences:

• As a customer, what I wanted was not where I wanted.
• As a customer, what I wanted was not available for purchase.

Have you explored improving these in non-conventional ways? Think outside the box!

What I Wanted Was Not Where I Wanted

We all have been in this situation before. When we visit a store, that item you wanted to walk out with is not on the shelf. As a customer, what can I do?

• Find a nearby in-stock store
• Have it shipped to me for free
• Ship it to this store for free

What methods do you give your customer to find it near them? If the shelf is empty, do you give the customer an option to order it, in-store, with free shipping? How about at your call center? What about the units in transit from the warehouse to that store? Can you get the customer what they wanted where they want it -- even if that "get it by" date is not today? After all, the customer did the footwork to try to find it - you could do the footwork to get it!

As a Customer, What I Wanted Was Not Available For Purchase

What happens if you are out of stock in your whole chain? What methods do you employ to always have supply? What methods do you take to always take orders?

Backorders: This is an industry term that is not well-understood by the average customer. A back order is when, as a merchant, I have ordered units from my supplier. I am confident I will get them. While we are awaiting that order, I can sell some/all of the units pending arrival. As a customer, I am given a date when the units are expected to arrive. With our most recent challenges in supply chains around the world, you could see how this offer may be not as prevalent. When your supply chain does normalize, try to employ a method where the customer can purchase what has not yet arrived via Backorders.

Units In Transit: As your inventory flows through your system, is every unit available for sale -- even while in transit? When a truck picks up units from warehouse A to bring to warehouse/store B, are those units available for a customer to claim? You would be shocked with how much inventory is "hidden" merely because it is being shifted.

Drop Shipping: Your inventory is exhausted. You have no more units to sell nor fulfill. Can you failover to an alternate supplier to keep your customers' demand satiated?

I hope this helps illustrate how you can employ methods to get the customer what they and where they wanted it. Creative fulfillment methods and ordering methods do rescue customers from frustration.