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Do you treat stockouts as exceptions or norms?
The question looks trivial, but the implications are profound. Most companies with product availability issues have a target for stockout reduction. If the current level of stockouts is say 10%, they may like to bring it down to 5%... it’s treated like any other improvement objective!
Every stockout on the retail shelves, in reality, is a pain point for some consumers. Are we happy with consumers experiencing only 5% pain instead of 10%? Can we call ourselves consumer focused and working towards consumer delight?
If the actual stockout for a period comes down to 5%, what sort of actions are taken by the Supply Chain team? If it’s treated like a norm, no action would be taken. Is it the right behaviour that we want to promote?
Companies focused on consumer delight treat stockouts not as norms, but as exceptions. Stockout patterns are analyzed regularly irrespective of whether these are above or below 5%. The Process of Ongoing Improvement is continuous, aiming for zero stockouts. We may not get there, but the journey and the improvement process add tremendous value.
Food for thought…