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Out Of Stock Calculation and How Accurest avoid Stock Out situation
Stock out date (Out of stock date) -
This is the date when our existing stock will come to an end. In other words, the day when available inventory will become 0.
In Accurest, we don’t use average from the past data. Instead we give emphasis on forecasting and tracking.
If we use the average reordering formula, we usually miss out on so many factors that can affect the sales of that particular product. That's why we use forecasting and tracking methods for the smooth operations (avoid overstock / understock) and increase the overall profits.
In Accurest, we use the number of days of supply to calculate Out Of Stock Date. This function also consider the MOQ , Incoming Shipment , total available inventory .
How to calculate the Out of stock date ??
Calculate the Total inventory
For the period for which forecast is available – We need to use the forecasted sales (Tracking).
For the further period (for which forecasts are not yet prepared) we need to use the average of forecasted sales for the further periods.
In case if the SKU is already OOS as on date, the OOS Date should be the current date.
If the forecast is not entered and there is stock available, please enter the forecast.
Advantages of using Out Of Stock Custom Function :
Track the sudden increase or decrease in demand
This can avoid excess stock pile or shortage of stock
Increase the customer retention and decrease the storage cost
Using this function , The OOS date can be calculated on Daily , Weekly , Monthly , Bi-Monthly etc.
Here we have created custom function to calculate OOS date based on time interval
Accurest Forecasting
In order to prepare forecast first understand what drives the Sale of the product - Is it organic sales or advertisement? Each product has its own season and usually follows a trend. Lots of factors affects forecast such as past data, product seasonality , life cycle of product , product pricing, Macro factors like spending power of customers for that category of the product ,Economic conditions of the country / region where the product is to be sold, The culture in different areas may be different and that will affect the forecasting.
Below points to be consider while processing the forecast Data-
Stock-out situations of the stock (excess sell , wrong prediction ,over demand )
Excess one-off Sale of a product (competitors' out of stock, new trend in the market)
Figure out the reason for inconsistency in sales (Out of Order / Advertisement / Seasonality).
Focus on sudden increase or decrease in Sales of past data.
Prime day and other similar events should be taken into consideration while forecasting
While forecasting include products given for free or in donation in case the same are planned for the further period as well If the season of the products are same.
Forecast Calculation
When Lead time is more use Top up approach
The Top-up sales forecast begins with combining the sales data of all the products. Depending on the scope of the business.
This means breaking down the overall sales prediction into multiple brands, products or even SKUs.
When lead time is less a Simple Forecasting approach based on stock out of products or seasonality.
This is not a month-over-month forecast but is a lower period forecast (say 15 days)
Frequency Of Forecast
The length of the forecasting will be:
Procurement cycle + Production cycle + Inbound delivery cycle (customs, etc.) + Outbound delivery cycle (transfer to retailer/ warehouses) + buffer.
This means if the total is 50 +10+ 30 + 10 + 5 days = 100 days, we should plan at least 100 days in advance.
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