Tracking Lost Sales as a Direct Cost of Inventory

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Does your company track lost sales due to out-of-stock periods? Many businesses do not. Lost sales that are not being accounted for and tracked, won’t be factored into future forecasts that can keep track of how much revenue is lost due to these out-of-stock periods. ForecastRx has identified this issue and we are working on ways to not only identify lost sales, but also use those lost sales to improve forecast accuracy moving forward.

When looking at this inventory cost, ask yourself what that lost sale means to your business. Think of the gross profit that’s lost on the sale and how it affects your business. Next, think of the consequences of losing a customer who can’t purchase product from your company, and instead goes to your competition. Finally, think of the ancillary costs to win that customer back. This could include numerous customer visits to rebuild the relationship, the loss of buy box, and additional marketing ad spend.

The cost of going out of stock is often not fully realized. ForecastRx will soon be able to help with this as we start keeping track of all the days that your company goes out of stock. Then, using our proprietary forecasting algorithms, we can calculate how much you would have sold during the period your company was out of stock. We will utilize that typically lost data to help improve your forecasts and avoid future stockouts.

Tracking Lost Sales

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