The 3Ps to Eliminating Out-of-Stocks: A New Paradigm for Inventory Management

With out-of-stocks representing both a significant cost and potential damage to customer loyalty, inventory management continues to be a thorn in the side of CPG companies.

The reason? Traditional inventory systems have always focused on improving forecasting, while the forecast is only a small part of the overall inventory management problem.

A new paradigm is needed - one that enables a pre-emptive approach to solving inventory problems before they occur.

This whitepaper outlines:

• Why traditional forecasting methods fall short
• Sources of inventory problems which lead to a vicious cycle
• Creating a virtuous cycle by pinpointing, prioritizing and preventing problems before they occur

When inventory is driven by actual demand, in addition to forecast, the supply chain operates at greater efficiency and at increased profit margins. CPG companies that fail to take an agile approach to inventory management may continue to struggle with on-shelf availability, and may find that consumers (and retailers) look elsewhere for the products they want.