Quick Summary: Stock statuses categorize inventory health using specific calculation values and resolution goals to prioritize items requiring immediate attention.
Why Stock Statuses Matter
In a perfect world, all your inventory would be in an OK state, perfectly balanced.
In reality, stock statuses highlight the imbalances that need your attention.
By assigning a clear, prioritized status to each item, the system helps you focus on the most critical issues first, guiding your daily actions toward the problems with the highest potential impact on your business.
Understanding Each Status and Your Goal
Stocked Out
An item is classified as Stocked Out when it is a stocked item, its available stock is less than or equal to zero, and there is future demand (sales forecast, BOM demand, or distribution demand). An item at zero stock with no future demand will not show as stocked out.
How the units are calculated: The value represents the accumulated demand (potential lost sales) from the day of the stockout until the first firm receipt arrives or for the duration of the lead time, whichever is shorter.
Why it matters: Items in this status directly create lost sales and reduce your fill rate KPI.
Your goal: Get these items back in stock as soon as possible by placing an emergency order and/or expediting existing purchase orders to shorten the stockout period.
Potential Stockout
An item is in a Potential Stockout status if the system projects that available stock will run out before the next purchase order arrives or an order placed today could be received.
How the units are calculated: The value represents the potential lost sales over the predicted stockout period.
Why it matters: These items are at high risk of becoming fully Stocked Out. This status gives you time to act before customers are impacted.
Your goal: Prevent the stockout by bringing existing purchase orders forward, expediting them, or placing new emergency orders to close the gap.
Surplus Orders
Surplus Orders are open purchase orders that, if received, would cause or increase an excess stock situation.
How the units are calculated: The system calculates an ideal order while ignoring existing purchase orders. If what is currently on order within the lead time is more than this ideal recommendation, the difference is flagged as the surplus quantity.
Why it matters: These orders will inflate your future excess stock value. Identifying them before they arrive is a key cost-saving action.
Your goal: Review these orders and take corrective action in your ERP by cancelling the order, reducing the quantity, or delaying the delivery.
Excess Stock
Excess Stock is available stock that is above the Order up to level.
How the units are calculated:
For stocked items, it is the available stock minus the Order up to level.
For non-stocked items, it is the total available stock.
For obsolete items, it is the total stock on hand.
Why it matters: Excess stock ties up working capital, increases holding costs, and can lead to obsolescence.
Your goal: Reduce excess stock by running down the surplus before reordering, promoting the item, or using features like Excess Redistribution.
➜ For more on this topic, read: Excess Redistribution Feature
New
New Items are stocked products that have stock on hand or on order but an unclear purpose because the system lacks sufficient data to classify them. These items typically have no forecast, no minimum stock level, do not supply other locations, are not part of a bill of materials, and are less than 12 months old.
How the units are calculated: This status does not have a unit value, as it represents a state of uncertainty, not a specific inventory imbalance.
Why it matters: Unmanaged new items have an unclear purpose and can distort your KPIs if left to drift.
Your goal: Take steps to properly classify or manage them, such as linking them in a supersession, adding a manual forecast, or marking them as obsolete if they are no longer required. (Judi: Link to “New Items Explained”)
➜ For more on this topic, read: New Items Explained
OK
An item is OK when its physical stock on hand is balanced between the ideal minimum (Safety Stock) and maximum (Safety Stock + Replenishment Cycle) levels.
How the units are calculated: This status does not have a unit value, as it represents a healthy state.
Why it matters: This is the ideal state for inventory, requiring no immediate intervention.
Your goal: No action is required.
Why Statuses Drive KPIs
Stock statuses are not just labels, they directly shape your KPIs.
Stocked Out items reduce your Fill Rate, since customer demand cannot be met.
Excess items inflate Stock Holding and reduce Stock Turns, tying up working capital.
New items create uncertainty and blur your KPI picture until they are properly classified.
By monitoring statuses, you can see which items are dragging performance down and take targeted action to correct them.
The Stock Status Hierarchy
When an item's projected stock falls into multiple categories, a hierarchy is used to assign the single most critical status. This ensures you are always alerted to the most pressing issue.
Why This Order Matters
Stocked Out is first: When an item is stocked out, customers are being disappointed right now. Lost sales directly reduce your fill rate KPI, so this is the most urgent condition to address.
Potential Stockout is second: These items are not failing yet, but the system predicts they soon will. This is your chance to prevent a future problem by expediting or placing emergency orders.
Surplus Orders comes next: These are a leading indicator of future excess. The system highlights them before they arrive, so you still have a chance to cancel, reduce, or delay them.
Excess follows Surplus Orders: This means you already have too much stock on hand. It’s a financial problem that ties up capital, but it does not stop sales the way stockouts do.
New is second-last: New items represent uncertainty. The system cannot yet classify them because there is too little history or setup. They should be reviewed regularly to prevent them from becoming a problem.
OK is last: Items in OK status are balanced and not creating issues. They are deprioritized so you can focus your energy on problem areas.
The Big Picture
The order reflects a simple principle:
Service-threatening issues (Stocked Out, Potential Stockout) are always the top priority.
Cost-related issues (Surplus Orders, Excess) come next.
Unclassified or stable items (New, OK) are lowest.
This ensures that managers always see the most critical risks first, without distraction from less urgent conditions.
Opportunities Engine – Netstock AI
The Opportunities Engine, our Netstock AI, takes the guesswork out of the process. It suggests actions that provide the greatest value in the shortest time. Let the AI know if its suggestions are helpful to improve future recommendations.
➜ For more on this topic, read: Netstock AI™ (Opportunity Engine™ Feature)
How To: Interpret Stock Statuses on the Dashboard
Stock Statuses on the Inquiry Screen Explained
How To: Mute and Unmute Items on the Dashboard
How To: Review New Items
➜ Read: How To: Review New Items
⚠️ Watchouts
Muted data: Muted items are excluded from Dashboard KPIs, which may improve reported results but hide underlying issues. Use this option carefully.
💡 Tips
Accuracy check: Before addressing any item with a critical stock status, ensure the calculations used to determine it are based on accurate inputs. An item’s stock status is determined by the same four inputs used in ordering: Data, forecast, policies, and stocking indicator. Verify these before acting.
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