Understanding Inventory Out-Of-Stock Detection

Maintaining appropriate inventory is paramount in today’s competitive retail environment. Major stores are not happy when they discover a product they want on their shelves is not available, especially when they don’t get advance notice from the supplier. That’s why Inventory Out-of-Stock Detection is so valuable.

What is Inventory Out-of-Stock Detection?

Inventory Out-of-Stock Detection is a feature of Lingo, our EDI and order processing platform. It lets users set an alert in their Settings that warns them when inventory levels are low. The threshold for the alert is established by the users. Warnings can be sent, for instance, if a certain percentage of the stock on hand has corresponding orders. Some suppliers might set that at 90%, while those with slower production times might make that number lower. By having the out-of-stock detection in place, users can accept new orders with confidence, secure in the knowledge that they have enough existing inventory to fulfill them. 

How does Inventory Out-of-Stock Detection work?

Lingo is not a WMS, so it doesn’t maintain a running count of your stock on hand and update inventory numbers as more products come into your warehouse. What Inventory Out-of-Stock Detection does is alert the supplier when a retailer is making an order that reaches the threshold for the alert. 

For example, let’s say you sell to Amazon and that you have 100 units of a specific item. You set the Inventory Out-of-Stock detection to alert you if 90% of your stock on hand has committed orders. If Amazon orders 90 units of the item, the alert is triggered. That way, you'll know you will need to order more of that item, and you'll know to send an 846 that reflects a low inventory to any of your retailers that offer that item .  The alert prevents you from disappointing an important customer, and promising units you don’t have on hand.

Each one of your retail trading partners is set up and monitored individually. In Lingo, reports can be generated to indicate On Hand, Ordered So Far, and the difference between the two numbers. Whenever the threshold is reached for the number of units left, the retailer should be advised to plan for being unable to refill the stock quickly. An EDI 846 is automatically created and sent at that time, informing the retailer that zero units are left. Since it is a threshold number, there may be a few units and not zero, but it’s far better to wait for stock to be replenished instead of getting an order for far more units than you have on hand.

Why is Inventory Out-of-Stock Detection important?

Multiple channels create more sales opportunities, but they can also lead to dissatisfied customers if they aren’t managed well. If orders aren’t coming together as they’re processed, it’s easy to overextend. That leads to disappointed retail trading partners and damaged relationships. If a retailer can’t get the stock they need from a supplier, they may be hesitant to order again or will seek out new partners. 

With Out–of-Stock Detection, suppliers can also reduce the number of inventory updates they send. While some retailers demand the EDI 846 on a regular schedule, it may not have to be sent every day when a supplier knows an alert will be prompted when orders reach a threshold. It’s less labor-intensive. 

The Inventory Out-of-Stock Detection feature was created like many elements of our software—a customer requested it a few years ago. It’s another example of the value of listening to our client needs, and responding with solutions that are beneficial to many.