5 Ways to Improve Product Availability and Banish Stockouts
Contrary to common belief, product availability does not require businesses to keep all items on-hand at all times throughout all locations.
Instead, product availability refers to having access to inventory whenever the customer needs it. This requires having connections to suppliers and external partners, as well as excellent inventory visibility.
How to Improve Product Availability
Product availability includes the cost of designing, manufacturing, storing, and delivering different item variances. With high product availability, customers can visit a business knowing all of their shopping needs can be fulfilled. Alternatively, low availability can result in lost sales and low customer retention.
By increasing product availability, companies can ensure they meet customer demands. There are several ways businesses can enhance their availability, such as-
Utilizing Sales & Operations Planning
Sales and operations planning (S&OP) requires complete cooperation and transparency between a company's departments in order to supply products and meet revenue targets. S&OP involves-
- Sourcing inventory
- Logistics planning
- Calculating stock quantities
- Meeting cost objectives
When performed adequately, S&OP managers can purchase and distribute products to the right locations at the right time, to meet customer demand.
Ensuring Records Are Accurate
Businesses with multiple storage locations or distribution centers may find it challenging to locate and keep track of inventory at each site. Inaccurately reported stock levels could delay product transferals and order fulfillment.
By standardizing inventory tracking methods and policies across all locations, companies can ensure reports are accurate.
With inventory management software, businesses can automate cycle counts, product transferals, and analytic reports to improve their stock control. Management systems make locating an item as simple as clicking a button, improving companies' visibility and efficiency.
Continually Improving Operations
It is vital that businesses understand their operations' strengths and weaknesses, including capacity, production limits, and average benchmarks.
Defining the capabilities of each operation enables companies to determine what areas need improvement. By creating more flexible processes, organizations can improve their responsiveness and reliability.
Building Rapport with Partners
Aside from encouraging open communication between departments, companies should also invest time in building rapport with their external partners. Product availability spans far beyond the walls of a single business and requires participation from-
- Service providers
- Freight businesses
- Distribution companies
Reasons to Improve Product Availability
Businesses that invest the time and resources to improve product availability can-
Maximize Conversion Rates
With advanced inventory management software, organizations can increase their stock visibility by accessing real-time data. Inventory systems incorporate historical and current data to define demand, usage, and sales trends, enabling businesses to prepare internal systems.
Companies that lack the capacity to view inventory activity in real-time run the risk of overselling products, resulting in stockouts and backorders. This can lead to unhappy customers, abandoned shopping carts, and lost sales.
Reduce Fulfillment Costs
Many online retailers have product recommendation tools that suggest items the customer might be interested in based on their purchase history or cart contents. However, the recommendation may be an inconvenience if they are not located in the same facility as the customer's order.
Generating product recommendations based on distribution centers enables the business to package items together, saving shipping and fulfillment costs. This is especially important if buyers are picking their orders up in-store. Avoiding split shipments also saves packaging expenses and prevents frustrated customers.
Cut Delivery Time and Cost
With the recent boom in online shopping, most consumers expect their packages to be delivered within two days. While this may be reasonable for large corporations, such as Amazon, smaller businesses that rely on distribution centers may not be able to consistently meet this expectation.
By utilizing multiple vendors to improve product availability, companies can determine which fulfillment center provides the quickest and most cost-efficient shipping options. This also allows customers that live closer to distribution centers to pick up their orders directly from the facility, significantly reducing wait times and labor costs.
Recover from Stockouts
Although every company wants to completely avoid stockouts, they are sometimes unavoidable due to fluctuating demand trends. Unfortunately, stockouts lead to disappointed customers, backorders, and often overworked employees.
However, by improving product availability through increased inventory visibility, businesses can better recover sales. For example, if a specific product line is selling out in one location and not another, managers can easily use their inventory software to transfer products. This saves the company from having to place an unnecessary purchase order.
By integrating the inventory software with established point-of-sale (POS) systems, employees can view product locations in-store. Therefore, if a customer is unable to find an item in-person, employees can locate items throughout the supply chain and have them shipped to the store or customer directly.
Customer satisfaction isn't guaranteed once they have located desired items and placed an order. Modern consumers often require the ability to add to, change, or eliminate items from their order while the request is being processed.
Even once the order is delivered, customers may want to return or exchange their products. By providing a variety, businesses can offer items with different features or in-store credit for returns so shoppers can browse their selection.