Removing Stock-Outs from Your Forecast


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What is a Stock-Out?

A stock-out or stockout is a period of time where your inventory goes to zero. A stockout can last as little as a portion of a day (just a few hours) or it can last for weeks or even months at a time. Since SoStocked is taking past sales history (velocity) to calculate future forecasts, stockouts may negatively impact your velocities and can paint a false picture of what to expect if you DON'T stock out in the future.

Turning on the Stockout Tool is an easy way to let SoStocked filter out past stockout days or periods to better forecast your future sales and prevent you from stockout out in the future!

Turning on the Stock-Out Tool

To turn the Stockout tool on or off, start from your Forecast page, then open a product forecast. Scroll down to the Stockout tool and toggle it on or off, then save. NOTE: You can apply these changes to one product, or any grouping of products.

Stock-Out Tool Settings

The default setting for the Stockouts tool is ZERO inventory AND if your sales drop below 30% of your daily average sales. This can be changed to "OR". This "or" setting is helpful for high-velocity products. Let's say you are selling an average of 100 units per day. You may want the tool to count any day where your sales are 30 units or less (30% of your average) as a stock-out. 

Any time you run out of stock, you can choose to include or exclude that data in your forecasting. Stockouts are dependent on your settings, meaning if you have no inventory AND/OR a specific % decrease of your average daily sales, which is used to factor out ramp down and ramp up between true stockouts. For example, If you average 100 sales per day, stockouts would be calculated for 30 sales or less.

You also have the option to choose the % of average daily sales that will count as a stockout.

Stock-Out Periods

There are seven (7) velocity periods in your default forecast velocity calculations. The stock out tool will adjust your daily sales velocity to compensate for zero sales days, or partial sales days during stockouts and partial stock-outs as covered above. However, what happens when an entire PERIOD is a stockout? For example, let's say you are out of stock for a full 7 days? The new Stockout tool algorithm will AUTOMATICALLY disable that period and recalculate your adjusted velocity based on the in-stock periods. Then, once you have been in stock again for that period, it will AUTOMATICALLY turn back on.

This makes it much easier to assign the stockout tool to many products across your entire catalog, without having to remember to find those products or forecasts with stock-out periods and turn them off. SoStocked will do that for you!

**Note: If you are a veteran SoStocked user and you prefer to use the older version of the Stockout tool, which does not have the new algorithm features, please click here to study the article on how version 1.0 works.

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