4 ways to deal with stock-outs

Mujer de tiro medio con tableta. Cómo afrontar una rotura de stock foto

There is no doubt that one of the most difficult and essential processes in all logistics is to maintain "perfect" inventory levels so that the entire distribution and, therefore, supply chain runs smoothly. Among the various factors that can cause stock-outs are external factors that often come unexpectedly, such as transportation strikes.

So, once it happens... What can you do about it? If you want to know the ways in which you can maintain an optimal availability rate and cope with a stock out, take a look!

Assess breakpoints

Once a stockout has occurred, it is advisable to analyze the points that have led to the depletion of safety stock. The main causes are poor sales forecasts and lack of internal and external communication, but external factors such as delayed shipments from suppliers or difficult-to-prevent changes in market trends also play a part.

To do this, you need to communicate with the rest of the staff to understand what happened. In this way, you will get a clearer picture about the causes of the stockout and can start taking action as soon as possible to avoid being out of stock for a longer period of time. 

Establishing a good replenishment policy

If it has been shown that the current replenishment policy is not sufficient to ensure optimal availability rates, it is best to employ the necessary improvements to start stocking the inventory as soon as possible. The measures to be reviewed to avoid stock-outs are as follows:

Inventory forecast

Undoubtedly, not making a good demand forecast is one of the most common causes that leads to stock-outs, especially if there are sudden peaks in demand, even if they are not seasonal. For this, you should study the inventory distribution data to detect its growth and adjust the stock to it with reliable suppliers.

Define rotation type

Along with demand forecasting, it is necessary to analyze how much time the goods spend in the warehouse until they are shipped, particularly if the product needs to be shipped well in advance. It is classified as high, medium and low.

Calcular plazos de entrega

Los plazos de entrega deben de ser los más cortos posibles para poder cubrir la demanda. Para conseguirlo, se debe mantener una comunicación eficaz con los proveedores, informando cualquier incidente presente y asegurando de que los pedidos lleguen a su destino.

Ilustración vectorial del concepto de escaneado de códigos de barras. Cómo afrontar una rotura de stock vector.

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Differences between Push and Pull distribution

Ilustración isométrica de un almacén. diferencias entre distribución push y pull vector

It is known that inventory management is based on the structure and objectives of the company's distribution network according to the sector in which it operates. This is done by deciding on the distribution channels through which to deliver products to customers and seeing which are the most optimal in terms of customer service and cost and resource savings.

To this end, there are two ways to fill inventory in a distribution channel: Push and Pull. Knowing their definitions and their advantages and disadvantages is crucial to choose the right strategy according to the industry you work in and your needs.

If you want to know the differences between Push and Pull distribution, their benefits and drawbacks and for which cases one strategy or the other is intended, read on.

Push Distribution

In a Push distribution system, it is the manufacturer or supplier that decides how many units of product are manufactured and distributed. First, they aggregate all the lower level storage points to historical demand and then perform demand forecasting to determine quantities. Next, replenishment inventory is shipped through the warehouses from the originating supply facilities.

This method makes the first nodes of the supply chain responsible for replenishing the stock, manufacturing the efficient amount of goods to be able to ship them to their distributors and avoid excess inventory.

Push Advantages

One of the advantages of this method is that high inventory levels can be maintained by predicting demand to generate a safe stock level. This is a producer-centric strategy. Therefore, for products that have peaks in demand at specific times of the year or are in high demand throughout the year, such as the food sector, such an approach is effective.

Push Disadvantages

However, one of the most notable drawbacks of Push distribution is that, as this decision is made by the lowest nodes in the supply chain, it is far removed from the actual demand being demanded by current customers. For this reason, it suffers from a notable lack of transparency and visibility into the needs of those customers.

That is why it is difficult to adjust to peaks in demand that are difficult to predict and provide good service, usually causing stock-outs. In addition, it requires good management to maintain a good product flow.

foto-media-hombre-usando-auriculares. diferencias entre distribución Push y Pull foto

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