Stock-outs

I started looking into stock-out occurrences yesterday. The high incident rate on A items alone just stunned me – wow, what an opportunity! If a SKU performs well enough to drive 80% of our business in a category, despite the fact it’s not always in stock, we don’t even know its potential.

I used to work in the fastener industry, where you knew the potential of your top sellers: there’s no mystery surrounding the demand of a ¼” flat washer. The comparative reliability of supply in that industry supports a stability in demand that is all too absent in the furniture industry. The entire supply chain – from customer to manufacturer – seems to accept the unpredictability of supply. A customer shopping for an end table may be disappointed to leave a store empty handed, but she probably entered with low expectations. If her local grocery failed to supply her need for a household staple, she would be outraged to leave empty-handed – largely because the US food industry has raised our expectations of its ability to meet our demands. Why shouldn’t our customers have the same expectations?