A Guide for CPG Brands to Eliminate Stockouts and Boost Efficiency with DMS Solutions

Out-of-stock (the absence of products on retail shelves) is CPG’s biggest concern, as it causes missed sales opportunities and impacts brand reputation. It underscores effective inventory management to preempt unwarranted out-of-stock items for improved customer satisfaction. According to a study by the National Retail Federation, inventory-related losses surpassed 10 Billion dollars in 2021, encompassing issues such as shrinkage, damage, and expiration of goods.

Why Reduce OOS for Your CPG Brand

Reducing Out-of-Stock (OOS) instances is crucial for your Consumer Packaged Goods (CPG) brand for several compelling reasons:

Maximizing Sales Opportunities: By minimizing out-of-stock situations, you ensure consistent availability of your products to consumers. It maximizes sales opportunities, capturing potential revenue that gets lost otherwise.

Preserving Customer Loyalty: Consistently meeting consumer demand enhances trust in your brand, encouraging repeat purchases and positive word-of-mouth recommendations.

Optimizing Retailer Relationships: By minimizing out-of-stock situations, you build stronger partnerships with retailers who appreciate the revenue contribution of your products in their revenue.

Enhancing Supply Chain Efficiency: An effective OOS reduction strategy necessitates a streamlined and efficient supply chain. By optimizing your supply chain processes, you not only reduce stockouts but also enhance overall operational efficiency.

Automating Inventory Replenishment to Avoid Out-of-Stocks

Automating inventory replenishment with a Distribution Management System (DMS) is critical for preventing out-of-stocks. The DMS utilizes real-time data to monitor sales, stock levels, and demand patterns, triggering automatic replenishment when levels reach a set threshold. This feature minimizes manual intervention, ensures product availability, and enhances customer satisfaction, fostering brand loyalty.

Additionally, automation optimizes supply chain management by predicting demand, minimizing excess inventory, and responding promptly to changes in demand. Employing a Dynamic Order Management feature within the DMS is a strategic investment for CPG companies, guaranteeing product availability, optimizing operations, and driving revenue growth.

Minimizing Stockouts and Reducing Costs with an Automated DMS 

Stockouts result in lost sales while directly impacting a company’s bottom line. Customers may switch to competing brands when products are unavailable, leading to long-term revenue losses. Moreover, the costs associated with rush orders, expedited shipping, and emergency production runs can quickly add up.

However, there is a solution that can help CPG companies minimize stockouts and reduce costs – an automated DMS (Demand Management System) solution. This advanced system provides real-time visibility into inventory levels and combines it with sophisticated demand forecasting algorithms. By leveraging these capabilities, companies can ensure that they maintain optimal stock levels at all times.

Features of Distribution Management System

Demand Forecasting for improved Shelf presence

An automated DMS solution offers precise demand forecasting by analyzing sales data and market trends, allowing proactive inventory adjustments to minimize stockouts. It also facilitates efficient resource allocation with real-time visibility into inventory, preventing rush orders and costly expedited shipping. This approach helps companies optimize stock levels, improve cash flow management, and streamline the entire supply chain process by integrating with systems like ERP or CRM. Ultimately, it enables businesses to balance meeting customer demand while avoiding excess inventory and investing in growth areas.

Analyzing Demand in Real-Time with an Advanced DMS System

Understanding customer demand is critical for inventory control, and advanced Demand Management Systems (DMS) are instrumental for Fast-Moving Consumer Goods (CPG) companies. Unlike traditional manual systems, advanced DMS can capture real-time demand fluctuations accurately, leveraging data from various sources and employing machine learning to identify changing consumer preferences. This proactive approach allows CPG companies to optimize inventory levels, adjust production schedules, and stay ahead of the competition.

Moreover, the advanced DMS system provides valuable insights into seasonal trends, promotional impacts, and external factors like weather conditions. By analyzing past data, the solution helps Consumer Packaged Goods (CPG) businesses with inventory and marketing plans.

Increasing Visibility and Accuracy of Stock Levels with a DMS

Effective inventory control requires clear visibility of stock levels across the supply chain. With a DMS system, CPG companies can achieve this level of visibility and accuracy, enabling them to manage inventory flow effectively.

The DMS provides real-time updates on stock levels at each location, including warehouses, distribution centers, and retail stores. This visibility allows companies to identify bottlenecks in the supply chain, track inventory movement, and make data-driven decisions to optimize stock levels.

Furthermore, the DMS system integrates with other software, such as enterprise resource planning (ERP) systems and customer relationship management (CRM) tools, to provide a complete picture of inventory status. This integration eliminates data silos and ensures that relevant stakeholders have access to accurate and timely information.

Utilizing Technology to Better Manage CPG Inventory

Technology is crucial in modern inventory management, and CPG companies should embrace it to stay competitive. By implementing a DMS solution, businesses can leverage technology to gain a competitive edge in the market. By streamlining inventory control processes and minimizing stockouts, companies can improve customer loyalty, increase sales, and enhance overall operational efficiency.

Moreover, a DMS system can integrate with other technologies like RFID (radio-frequency identification) and IoT (Internet of Things) devices to further enhance inventory accuracy and streamline processes. These technologies enable companies to track real-time inventory movements, reduce shrinkage, and improve supply chain visibility.

Conclusion

In summary, CPG companies face significant challenges regarding inventory control, especially avoiding stockouts. However, by implementing a DMS solution, businesses can overcome these challenges and ensure better inventory control.

A DMS system enables companies to automate inventory replenishment, minimize stockouts, and reduce costs associated with rush orders. The system also analyzes demand in real time, increases the visibility and accuracy of stock levels, and utilizes technology to optimize inventory management.

Check out our advanced DMS solutions that will help keep your products on the aisle while having you automate all retail execution tasks. Book a demo with our experts today.

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