How Can You Prevent Inventory Stockouts With ERP Software?
Inventory stock outs are combined effect of poor inventory management, lack of internal communication within organisation, unsynchronized function of your organisation with your business partners like vendors, and logistic partners.
Result is missed sales, ruined market reputation, and turned off customers. Can an ERP serve as a solution? Let us explore!
Overview:
Stockout! It’s a sign for an organisation that its product is working well in the market, and it is in high demand.
But whether online or in person, when a customer encounters stockout, it creates ripple of dissatisfaction.
These ripples cost brand image, brand affinity and when it happens frequently, it also causes brand aversion!
So, how can organisation prevent this situation??Can an ERP software help in reducing stockout situations. Let us discuss everything in detail.
Please read the blog till end.
What is Stockout?
Stockout or out of stock (OOS) situation is the situation when you don’t have adequate stocks of inventory in your warehouse to meet customers’ demands. The situation can arise at any point of supply chain.
In case of OOS situation, the organisation must update availability status at every sales channel so that customers are aware of stockouts and don’t purchase it inadvertently.
In case a customer purchases a stockout product, the organisation should be ready to face the situation.
It can explain the situation to the customer, make necessary compensation in terms of alternative product, provide heavy discount, or freebies and declare when the product will be in-stock again.
Companies not able to please the customer in this adverse condition, might see its impact in the future sales.
Why does Stockout Arise:
There are many reasons of stockouts. Some of which are:
Faulty forecast:
Inaccurate forecasting is a sure way of stockouts. Therefore, an accurate inventory forecasting is one of the important elements to avoid stocouts.
Inaccurate inventory counts:
Due to human errors, sometimes the stock count is updated wrongly.
This gives a wrong picture of available stock, resulting stockout. Sometimes if a company has multiple sales channels, and stocks are not updated in real-time. This also causes stockouts.
Supplier delays:
Sometimes suppliers don’t provide raw material on time. This delay further delays the following activities and operations, thereby resulting in stockouts.
Production at hold:
Due to technical issue, raw material unavailability, malfunctioning of machines or any other reasons the production is stopped.
With halted production, stockout situation is inevitable.
Transport or logistics issues:
There are many areas which affect smooth logistic services.
Natural reasons like flood, earthquake can disrupt the services.
Along with this, vehicle breakdown, strike of transporters, inadequate supply of raw materials etc can disrupt the whole logistic support and cause stockouts.
Ways to prevent stockouts:
If organisations want to mitigate the occurrence of stockout situation, it must deploy ERP for inventory control.
Such software can help organisations to work on the probable causes of stockouts and devise ways to mitigate chances of stockouts.
Some of the ways, an ERP software can offer, to prevent stockouts are:
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Improve demand forecasting and planning:
Accurate demand forecasting can serve as a shield against unpleasant damage of stockouts.
Although no inventory management software can forecast overnight shift in demands, but it can forecast seasonal demands, monthly demands based on past trends and keep inventory levels at considerable mark.
BatchMaster ERP has highly effective demand forecasting add-on.
This can:
Besides, BatchMaster ERP provides a comprehensive material and production planning module. This planning ensures that stockouts are prevented.
Set Reorder point-
A reorder point is the inventory mark below which inventory manager gets an alert to order the critical item.
This helps in avoiding stockouts of item. In other words, reorder point is the minimum quantity of an item needed on hand at any point of time.
BatchMaster ERP allows organisation to set re-order point. It generates an alert when inventory level of an item touches the threshold.
Regularize cycle count-
Frequently counting the complete stocks in warehouse is a sure shot way of maintaining adequate stock.
But that is time consuming. Therefore, a better way is counting and checking a small section of SKU as per a schedule.
It allows inventory team to audit inventory amounts and ensure actual count matches with that listed in spreadsheet or inventory management system.
BatchMaster ERP offers a dedicated module for Physical and Cycle Count that can adapt to your Physical count method and streamline every step of it.
Starting with the segregation of inventory to be counted, generation of tags, tallying of perpetual and physical inventory, banning any transactions from being executed during the count-in-process and lot more.
Organisations must regularize the process to take stock count and keep the perpetual as well as real inventory synced at all times.
Optimize your lead time-
Lead time is the time between placing an order with supplier and receiving the product.
It determines how much inventory you need to keep at hand to meet the demands.
To optimize lead time, work with reliable suppliers who can deliver products promptly, on-schedule.
By carefully managing lead time you can effectively manage inventory accuracy and reduce stockouts.
BatchMaster ERP helps you with identifying the best suppliers with minimum lead time and delays.
Get real time inventory updates –
Your inventory management software or system should have capabilities to update inventory in real-time.
It should check and record warehouse movement even at the remotest part of the warehouse.
This will make sure that there is always a correct Available-to-Promise inventory count available at a given point of time.
This transparency will reduce chances of stockouts.
BatchMaster ERP is such an ERP software for inventory management which gets updated in real-time.
It accurately offers the Probable-Available-Balance and Available-to-Promise Count considering all sources of demand and supply.?
It supports all hand -held devices for scanning inventory.
With these the inbound and outbound transactions happening in the warehouse can be recorded right where and when they are happening, always giving a real-time view inventory to all the associated departments.
Conclusion:
Although stockouts are nasty, but organisations can deal with them. And, what an organisation exactly needs to deal with such dreadful situations is a robust ERP software for inventory management. One such software is BatchMaster ERP.?
Through its Warehouse Management Solution and intensive Inventory Management capabilities, it helps organizations manage and optimize inventory to make stockouts a history for any organization
Want to know more about this amazing solution? Contact BatchMaster.?
Realtor Associate @ Next Trend Realty LLC | HAR REALTOR, IRS Tax Preparer
1 年Thanks for sharing.