Stockout Sentinel

Stock-outs hurt retailers’ revenue and consumer experience, particularly when dealing with unknown stock-outs caused by ghost inventory. Previously retailers may have opted to overstocking as a solution to improve on-shelf-availability resulting in higher inventory carrying costs and space requirements.

Phantom Inventory, also known as Ghost Inventory, is an occurrence of unknown stockout due to inaccurate inventory information in operational systems. Phantom inventory can "cost" 1%-3% of revenue depending on the retailer. These unknown or virtual stockouts are detrimental for fast moving consumer goods retailers who have brick-and-mortar stores and/or offer buy-online-pick-in-store (BOPIS).

Systems showing inventory while it physically doesn’t exist in store, causes revenue impact, poor customer experience and inaccurate forecasting. There are several approaches to identifying phantom inventory issue. Stores can increase inventory cycle frequency and scope, implement technology such as RFID tags or they can deploy machine learning models.

Ideal solution for larger FMCG retailers is AI and machine learning models due to their immense dataset making it difficult to manage in traditional analytics approaches. Ensure that your stores have good On the Shelf Availability (OSA) to maximize revenue.