Data-Driven Insights

Survey Says: The Truth About Data, Out of Stocks, and Lost Sales

February 18, 2014   |   Ally Hanlon

What does the Buyer-Supplier Connection look like in numbers?

A team from IntegriChain is attending ECRM Cough/Cold, Analgesics, and Allergy this week in Amelia Island, FL, and so we thought it would be worth taking a look back at the results of the Downstream Data & Buyer-Supplier Connection survey we conducted at the same conference last year.

We spoke to over 50 manufacturers and asked a lot of questions about their forward supply chain. We asked things like what kind of data do you get from the channel? Are you currently doing Vendor Managed Inventory (VMI) with any of your accounts? How do out of stocks impact your business? The results were fascinating and more than a little eye-opening.

Data, data everywhere
To start with, we learned that suppliers seem to have plenty of data. In fact more than 80% are getting inventory data from distribution centers as well as at the store level. However, even with all that data, three-quarters of the respondents are NOT doing VMI with any of their accounts. So despite the inventory data they receive, they have not taken the next step in making the ordering process more collaborative and following a demand-driven model for supplier initiated replenishment. It is also interesting to note that while 95% of respondents are conducting business reviews with their major accounts, two-thirds of them are doing it just twice a year or less. Presumably with the right data at hand, these reviews could be more frequent and more effective at stengthening buyer-supplier relationships and achieving stronger downstream inventory positions.

what_percentage_of_your_sales_do_you_lose_to_out_of_stocks

When an out of stock is a lost sale
A majority of respondents indicated that out of stocks equate to a noteworthy percentage of lost sales. Over 50% of survey participants indicated that 5% or more of sales are lost due to the product being out of stock. If so many manufacturers experience lost sales due to out of stocks, the obvious next question is what should be done to prevent them? While not a simple problem to solve, the reality is that greater data-driven collaboration between buyers and suppliers is an important part of preventing out of stocks as a source of revenue erosion and customer satisfaction.

Questions to Ask from the Survey
Click on the link below to download the full survey results, and as you review the data, consider the following questions as they relate to your own business. Are lost sales a problem that is worth fixing for your business? What is going wrong in your experience that’s causing this issue? What is the impact to your organization if business reviews don’t go well? If you put yourself in the shoes of your buyer, what is the one thing that they wished you did or had in the business review? Please leave your thoughts on these questions in the comments. We’d love to hear from you.

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