Executive Briefings

Out-of-Stocks Harm Retailers, Suppliers and Distributors - Not Just the Customer

The holiday season is a make or break scramble for retailers. Their offices are busy and everyone is in a high stress mode to make the season profitable. They invest in getting people in their stores or on their sites with attractive offers. Unfortunately, this omnichannel approach has given way to increase "out-of-stock" challenges.

Out-of-stocks can be a costly occurrence for retailers, as a study commissioned by IHL Group has found. In 2015, out-of-stocks, overstocks and returns cost retailers an estimated $1.75tr, and out-of-stocks accounted for $634.1bn in lost retail sales for the year ending in the spring.

Although manufacturers and suppliers do not have the same urgency around Black Friday, Cyber Monday or last minute shopping, there may be only one or two degrees of separation between the manufacturer/distributor and the retail consumer. A recent study by Gallup, Guide to Customer Centricity, Analytics and Advice for B2B Leaders, claims "B2B companies are at risk of losing more than two-thirds of their customer base." This study concludes that strong customer relationships are built on collaboration and that good suppliers are a competitive advantage.

During the holiday buying season, inventory moves rapidly. If retailers are not confident in your product availability, they will find other suppliers. Near real-time inventory is critical, so is following integration best practices, especially if you have multiple retailers pulling from the same stock. If manufacturers and suppliers can support their retailers through the holiday season far better than their competitors, they build long-lasting, profitable relationships with their retailers.

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Out-of-stocks can be a costly occurrence for retailers, as a study commissioned by IHL Group has found. In 2015, out-of-stocks, overstocks and returns cost retailers an estimated $1.75tr, and out-of-stocks accounted for $634.1bn in lost retail sales for the year ending in the spring.

Although manufacturers and suppliers do not have the same urgency around Black Friday, Cyber Monday or last minute shopping, there may be only one or two degrees of separation between the manufacturer/distributor and the retail consumer. A recent study by Gallup, Guide to Customer Centricity, Analytics and Advice for B2B Leaders, claims "B2B companies are at risk of losing more than two-thirds of their customer base." This study concludes that strong customer relationships are built on collaboration and that good suppliers are a competitive advantage.

During the holiday buying season, inventory moves rapidly. If retailers are not confident in your product availability, they will find other suppliers. Near real-time inventory is critical, so is following integration best practices, especially if you have multiple retailers pulling from the same stock. If manufacturers and suppliers can support their retailers through the holiday season far better than their competitors, they build long-lasting, profitable relationships with their retailers.

Read Full Article