In an ideal world we would always have the right amount of stock - not too much and not too little. But because we live in the real world filled with complexities and unpredictability, we know that this may not always be the case. Let’s explore the various stock statuses an item could have.

An item is OK when its physical stock on hand lies between the ideal minimum (SS) and maximum (SS + RC) stock levels.

An item is considered to be stocked-out, if:

This means that even if an item has zero stock available, it will not be considered stocked-out if there is no demand for that item.

Items with this stock status could result in lost sales which will negatively impact your Fill rate KPI.

The lost sales value, at cost, is accumulated until either the next order arrives or an order placed today can be received (whichever comes first).

Potential stock out items are predicted to run out of stock before either the next purchase order arrives or an order placed today can be received.

The status units is the potential lost sales over the predicted stock-out period.

This is not as bad as a Stockout as it could still be actioned in order to manage the situation. Possible actions include expediting the order, air freighting it or even buying from a competitor to avoid losing the customer.

Surplus orders are purchase orders which if received into your warehouse, will create Excess stock.

To determine whether you have surplus orders, the App computes an order to be placed today, ignoring all existing purchase orders.

If what is currently on order within the lead time is more than this computed recommended order, the item is flagged as having surplus orders and the quantity is set to the difference.

Possible actions include canceling the orders, delaying it or reducing the order quantity.

Excess stock is defined as available stock above the Order up to level (SS + LT + RC).

For stocked items, the difference between available stock and the order up to level is the number of units that are in excess.

For non-stocked items, the units of excess are equal to the Available stock, while for obsolete items, the units of excess are equal to the Stock on hand.

Possible actions to reduce excess stock include promoting it, providing combo deals, reducing the price or selling it to a competitor.

The cost of excess stock is understated because it does not consider the costs involved in storing the excess stock, cleaning it, counting it, insuring it. Not to mention lost opportunity cost. The money tied up in excess stock could have been better invested elsewhere.

New items are stocked items which have stock on hand or stock on order but currently have an unclear purpose. They:

Because these items have limited sales history and forecast information available to them, the App cannot allocate these to a more suitable stock status.

Below are some ways of actioning these items. All these actions are covered in more detail on the relevant screens throughout the App.