Before we begin, let’s carry out a small activity. Pen down the number of times your outlet has suffered a loss of profit which could have been avoided. Below it, number down the number of times this loss of profit has been caused due to stock-out. Yes, that’s what we are intending to show you. Kitchen stock-outs consist to be a major reason for the loss of profits.
Kitchen Stock-outs are a grave issue for the business. Yet most of the time, no actions are being taken to see that such things don’t happen in the future. Stock-outs lead to 2-3% of revenue depletion.
What causes a kitchen stockout situation?
- Lack Of Communication: The communication gap between the person at the counter and the kitchen causes stockout. Yet, this issue is on a day-to-day level and is only when there’s a sudden spike in demand.
- Inaccurate Data: There are chances that the raw materials are lost or misplaced. With the help of proper inventory management systems, one can correct the inaccuracy between the goods actually present and the ones perceived to be present.
- No Proper Forecasting: With the help of studying patterns and forecasting demand, one can ascertain the reorder quantity. Lack of forecasting can be a major reason for stockouts.
What are the Effects of Stockout?
- Direct Sales Loss: With each order, there is a reduction in the inventory but an increase in the revenue. When a customer gets disappointed with the non-fulfillment of the order for which he visited the store, he’ll go empty-handed and in turn cost the outlet sales loss.
- Decreased Brand Image: Stockouts lead to disappointments at the end of the customer. His unfulfilled expectation of having his favorite dish causes an unpleasant customer experience. Hence, stockouts lead to a decreased brand image.
- Poor Customer and Vendor Retention: The whole stock ordering and receiving process is an essential part of the supply chain. Frequent stockouts add pressure on the vendors to cover it up with instant and untimely deliveries. At the same time, the customer would also look out for other brands to receive the product he wishes. Thereby, stockouts causing poor customer and vendor retention.
Stock Keeping Units are key to help the kitchen from stockouts. There are different products that one needs to take care of while maintaining the inventory. Hence use the best technology for the maintenance and forecasting of stock. Keep in mind that overstocking isn’t a solution to stockouts as it will disrupt the Economic Order Quantity (EOQ), cost food wastage, and will also cost you more than needed. Hence, fallback to the tried and tested technology like IMS and SKU’s so that there’s no stockout while you reap the profits!