Back in 2010 I wrote a post about Managing Out of Stock Products. There are some great comments on that post. They stood out to me so much that I still recall almost four years later that the prevailing theme was: why don’t you automate it? Well, a few months ago we finally did.
The main hold up in 2010 was the accuracy of our inventory system. Since then we’ve made several initiatives and now have the system at the point where it’s as accurate as it’s every going to be (that is to say, it’s still not perfect but it’s close enough). Back in 2010 this also wasn’t that much work to maintain. By the end of 2013 it became burdensome for my business partner Greg who does the ordering and our operations manager Charlie who manages incoming shipments. So, it became worthwhile to invest in the programming time and effort to automate the system.
Now if an item goes out of stock based upon any type of inventory adjustment (generally a customer purchase), the product is automatically marked out of stock on our website. If we have an incoming shipment from that distributor we use the estimated delivery date in our database as the estimated date that the product will be back in stock. If we don’t, it’s just set to five days out and then manually adjusted as soon as we know more.
When the product is received in our warehouse and added back into inventory, the website is updated automatically and the product is no longer marked as out of stock.
From a customer perspective, if they buy something out of stock the system is still automated like it was back in 2010. They’re kicked an email notifying them that the order is on hold until the estimated ship date that’s in our system. The difference now is that products are marked out of stock instantly instead of a lag of up to a day. This almost eliminates the customer service emails where we have to say “Sorry, your order was supposed to ship today but it won’t until next week because we just realized we’re out of stock”.
When a customer orders more than we have in stock (say they order 20 and we have 15), the order is automatically held until we contact the customer. Sometimes they want to wait, sometimes they want the 15 and want a refund for the 5, sometimes they want the 5 sent at a later date. There are too many scenarios to automate. We reach out to the customer right away and then handle it however they prefer.
The system has been in place for a few months now and it’s been a huge overall success. Big time savings for Greg and Charlie. Our website is more accurate. Our customers are more informed. Customer service related to out of stock products is down. Maybe most importantly, it will scale. Whether we run out of 1 product or 10 or 100, there isn’t much difference in the work involved.
It’s one of those seemingly minor improvements that really makes a big difference in the long haul. I’m glad we finally made it happen!