{"id":3492,"date":"2021-05-17T09:24:50","date_gmt":"2021-05-17T14:24:50","guid":{"rendered":"https:\/\/www.rmservicing.com\/?post_type=articles&p=3492"},"modified":"2021-05-17T09:24:51","modified_gmt":"2021-05-17T14:24:51","slug":"is-phantom-inventory-starving-your-sales-store-level-inventory-audits","status":"publish","type":"articles","link":"https:\/\/www.rmservicing.com\/articles\/is-phantom-inventory-starving-your-sales-store-level-inventory-audits\/","title":{"rendered":"Is Phantom Inventory Starving Your Sales? Store-Level Inventory Audits"},"content":{"rendered":"\n

One of the perpetual challenges facing retail brands is knowing whether inventory is actually on the shelf, or if it just looks like it\u2019s there. If there are discrepancies and items are actually missing when they\u2019re reported as \u201cin stock,” the costs to suppliers and retailers can be devastating.<\/p>\n\n\n\n

Is Phantom Inventory Impacting Your Sales?<\/h1>\n\n\n\n

Phantom\ninventory<\/a> is exactly what it sounds like \u2013 inventory that appears to be in\nstock at a retail location but actually is not. Only the ghost of it remains.\nJust kidding. But that doesn\u2019t make the consequences of missing or out-of-stock\ninventory any less scary.<\/p>\n\n\n\n

Phantom inventory exists two ways:<\/p>\n\n\n\n

  1. Misplaced and is not where it should be: on the shelf, display, or properly accounted for in the backroom
    <\/li>
  2. Or it\u2019s out-of-stock at that retail location entirely<\/li><\/ol>\n\n\n\n

    Now, these are normal challenges that any retail supplier\nfaces. But it becomes \u201cphantom inventory\u201d when those missing items appear as\n\u201cin-stock\u201d within the retailer\u2019s inventory system.<\/p>\n\n\n\n

    When this happens, brands think everything is fine at the store level. You check your store-level counts, perform your analyses, and create your reports. Everything looks good and you sleep easy that night.<\/p>\n\n\n\n

    But then\u2026<\/p>\n\n\n\n

    A few report cycles later and you start noticing a few\ninconsistencies like:<\/p>\n\n\n\n

    1. Your inventory turnover rate is decreasing<\/li>
    2. You see inventory is available but there are no\ncorresponding sales<\/li>
    3. Unusual spikes and dips after manual inventory\nallocations<\/li><\/ol>\n\n\n\n

      All of these signs should cause the hair on the back of your\nneck to stand up. <\/p>\n\n\n\n

      The Cost of Phantom Inventory<\/h1>\n\n\n\n

      Already, your head may be spinning with the implications of\nphantom inventory. Complications to supply chain? Check. Inaccurate sales\nforecasting? Absolutely. And it all leads back to one big problem: missed\nsales, which means lower profits. <\/p>\n\n\n\n

      But as with any business decision, you need to decide if the\ncost to fix the problem is less than the cost of the problem itself. So, let\u2019s\ntake a look at the financial consequences facing both suppliers and retailers\nwhen phantom inventory occurs.<\/p>\n\n\n\n

      The Cost to Suppliers<\/h2>\n\n\n\n

      One missed sale is a bummer. But it\u2019s a drop in the bucket.\nMaybe $7 are lost? If that was all we\u2019re talking about, it wouldn\u2019t be a\nproblem. Unfortunately, one lost sale almost always leads to others.<\/p>\n\n\n\n

      When items are out of stock, you\u2019re missing out on\nmaximizing the sales as it is affecting replenishment, resulting in inherent\nongoing missed sales. <\/p>\n\n\n\n

      Not only that, but when customers can\u2019t find the item\nthey\u2019re looking for, the problem spirals, fast. Check out these scary consumer\nstats on out-of-stock\n(OOS)<\/a> costs:<\/p>\n\n\n\n