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Assessing and preventing out-of-stocks


Automatic out-of-stock identification


Rule-based software-agents enable automatic identification and active notice of out-of-stocks and manage their processing, up to and including their automatic closure. That means that these software agents reduce response time when gaps in stock are discovered and minimize lost sales.

The evaluation of out-of-stock items provides valuable indications that can help optimize the assortment of goods on offer and provision of merchandise that meets demand, which also proactively avoids out-of-stocks and optimizes sales.

Out-of-stock items are automatically identified using software agents. These are rule-based systems whose business logic is easily modeled, flexibly expanded and effortlessly checked using Visual Rules, our business rules system, in contrast to conventional inflexible application logic. To identify out-of-stocks, this business logic refers to up-to-date data, such as receipt data, sales, target inventory, display stock and delivery quantities. Out-of-stocks are classified with respect to urgency and importance on the basis of key data, such as sales, space profitability, margins, ad effectiveness or merchandise presence.

Identification and classification of out-of-stocks is an ideal supplement to merchandise planning that works with prognoses, meaning that it is always subject to statistical errors. Out-of-stocks identified through continuous monitoring of the merchandise planning system by software agents reveals previously undetected problem areas. Software agents can draw on existing data when needed and can be deployed to supplement existing inventory control systems and be integrated with them.


Active notification of out-of-stocks

Software agents actively forward out-of-stocks that are classified as urgent and important to the responsible processer. This minimizes manual processing expenditure, which is particularly important for retail outlets with a large number of items listed and/or potential out-of-stocks. The electronic connection of the outlets’ inventory control system means that no valuable time is lost between notice of out-of-stocks and their processing.


Managing out-of-stock processing


Software agents can initiate manual or automatic efforts to process identified and classified out-of-stocks and coordinate the management of their processing. This includes escalation when measures are not taken or when the anticipated effect is not attained. By continuously reviewing the results of processing, software agents contribute to improving the quality of the measures taken. These agents’ active management of processing also ensures quick reaction times and minimizes out-of-stocks and lost sales without generating overstocks.

One manual action that should be managed is the prompt to check and enter the market inventory of the items involved. The resulting more exact stock control facilitates more exact merchandise planning, which in turn minimizes stock errors in the outlets and avoids out-of-stocks. The prompt can also initiate the input of direct orders or give the reasons for the out-of-stock.

Managing these measures can also include completely automatic execution. Activating automatic merchandise planning initiates, for example, the next available delivery, thus closing the out-of-stock. The efficiency of such consistent management ensures not only permanent merchandise availability; it also counteracts lost sales.


Assessing and preventing out-of-stocks

The assessment of out-of-stocks that occur at the regional or central level provides valuable information for category management and help in improving the assortment of goods. The data arrived at through such assessment serve to identify changes in demand at point of sale and facilitate adjustments that ensure the supply of goods reflects current demand. This not only improves sales and automatically fills gaps in stock; it also proactively avoids out-of-stocks for similar items.