Why Out of Stock (OOS) is such a protracted, pervasive and pernicious issue for retailers

19th Century Britain was famous for retailing. According to Adam Smith [1]

To found a great <British> empire for the sole purpose of rising up a people of customers, may at first sight, appear fit only for a nation of shopkeepers.

20th Century Britain’s Heathrow Airport pioneered commercial EDI [2] and Tradacoms pioneered electronic data interchange for retailers [3]. ANA, now GS1 UK, introduces barcodes five years after they debut in the US and the first Electronic Point of Sale system also goes on sale in the US.

21st Century Britain’s GS1.UK, as part of a global organization creates, XML standards for EDI in 2002. It 2003 it creates a global electronic product code standard, in 2004 creates an RFID standard and a global data synchronization network.

200 plus years of world-class retailing, 40 years of barcodes, 40 years of EDI, 11 years of RFID, decades of experience with Vendor Managed inventory (VMI) and Direct Store Delivery (DSD) fulfillment models and we still have a chronic out-of-stock (OOS) problem. It is a problem for large and small, as according to Bloomberg’s news service, even Walmart suffers from OOS. [4]

OOS persists because all that technology and expertise still can’t prevent inventory from being:

  • Damaged
  • Miscounted
  • Out of date
  • Not in Location
  • Stolen

Process improvements and technology advances will continue to reduce the inaccuracy, but while the inaccuracies persist, why not use a probabilistic approach to replenishment planning instead of pretending the inventory numbers are always correct?

Our next white paper will show what happens when you stop pretending you know what inventory you have and embrace the ‘Maybe’, as in maybe accepting your inventory transactions are inaccurate is how you can reduce OOS.

[1] An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith 1817, Ch7 Volume 2

[2] LACES – London Airport Cargo EDP System http://sw.ccs.bcs.org/iclarch/arch10.html

[3] TRADACOMS https://www.gs1uk.org/about-us/who-we-are/our-history

[4] http://www.bloomberg.com/news/articles/2014-03-28/wal-mart-says-refilling-empty-shelves-is-3-billion-opportunity

Peter Darragh

Peter Darragh

Vice President of Delivery at Mariner
In his business development capacity Peter helps executives evaluate the impact digital investments can have on their business models and operations. In his delivery role, he manages the teams that apply their data integration, analytics, process automation and machine learning expertise to make our customers digital masters.

Please share your thoughts on this post:

Your email address will not be published. Required fields are marked *

About Mariner

Call Us Email Us

How Can We Help You?

Mariner © 2019. All Rights Reserved.