A stock out or (out-of-stock) is when you run out of inventory for your business. This can affect part of your business or all of your business depending on what you are out of stock on. Stockouts are expensive for business owners. They harm customers and retailers as they both miss out on sales and shopping locally. Stockouts happen for many reasons. Here are some tips to help you prevent a stockout in your business.
Inventory Counts
Your physical inventory is the lifeblood of your business and you should be tallying each piece of stock on a regular basis. It is time-consuming and tedious, but it gives a weekly snapshot of what is on hand and when you need to order more inventory to prevent a stockout.
Stock counts often happen quarterly or monthly, but when the supply chain becomes a problem and you are running low on stock, you should start taking count each week. Counting your stock weekly will help you to have a more accurate picture and make it more manageable to cycle your inventory.
Point of Sale System
Many business owners use Quickbooks (POS) Point of Sale system to sell merchandise. It contains a lot of data and can help you to maintain your inventory. One way to prevent stockouts is to leverage your POS system to automate low stock alerts when you start to sell out of inventory. What type of POS do you need? Here are some features to think about when choosing your POS system.
- Purchase order generation
- Automated inventory tracking as you sell products
- Low stock alerts
- Barcode and inventory scanning apps
- Partial counts for inventory
- Analytics reporting to see how you are performing
Automated Reordering
There are many software solutions to prevent stockouts. You might consider automating your reordering process with the help of your POS system. When your stock gets low you get a stock alert and the system then generates a purchase order to get more stock in before you run out. If you enact this feature, make sure you order more stock than what you need to account for long lead times.
Safety Stock
It can be expensive to sit on stock for a while if things get slow. The longer the stock sits in your warehouse, the more you lose profit when you sell it. But The advantage of keeping extra stock on hand is you don’t run out when your regular inventory gets low. This is your safety net. You should keep 7 to 14 days worth of stock on hand to prevent a stockout. Here is a formula to help you figure that out.