How Are Instocks Determined?
- What instocks are
- What a “pipe” is
- How to calculate instocks
- Avoiding out-of-stocks
Determining instocks is a necessary task for businesses to supply consumers with the products they want and need. For a business to succeed, maintaining its stock and replenishing out-of-stock items is essential.
Several different pieces contribute to calculating instocks and determining replenishment. If a business fails to address each of these parts, it is in jeopardy of losing customers. To avoid having unavailable items and ensure you please your customer, let’s get into the steps to determine your instocks and replenish your merchandise.
What are instocks?
Let’s begin by defining some of the terminologies we will be using throughout this article.
An instock item is essentially any product stored at a retailer or warehouse ready for customer purchase. It is not necessary to order instock inventory for a customer. They can either purchase it in person or online, and it is sitting at the location of purchase or in a warehouse waiting for shipment.
An out-of-stock item or OOS is a product that is currently not available for customer purchase. OOS items can take place at physical stores, online stores, and warehouses. The product is either not there at the store or not in the warehouse. When an item is out-of-stock, stores need to replenish it, meaning to make it available for purchase to the customer.
How are instocks determined?
Having a successful business has many parts, one of those extra crucial parts is having items in stock for customers to purchase. There’s no easier way to lose customers than repeatedly have the product they want out of stock. If that happens, the customer will become frustrated, or even worse, will search out that product from a competitor who does have it in stock.
For stores to keep their instocks under control, let’s talk about how instocks are determined.
We determine instocks by how many physical products there are currently on hand, meaning at the store. When a product is on hand, that means it is in stock and ready for sale. This part of calculating instocks is the simplest. However, there are more parts to determining instocks than just the products at the store.
Instocks are determined when you calculate your instock levels. Determining instocks is split into three different pieces of data.
There are the instocks that are currently available, replenishable instocks, and weekly instocks.
- A store’s current instocks are the number of that particular product available at the store and ready to go.
- The replenishable instocks are the amount of product estimated to be of need for the projected demand on that particular business day.
- Weekly instocks account for the percentage of stock of a product needed based on last year’s data.
All of these numbers contribute to a store’s instock levels. The instock levels will determine the replenishment needed to avoid having out-of-stock items.
What is a “Pipe” in replenishment?
When a store is figuring out its instocks, there is more to the number of products it has than what’s physically at the store or the warehouse. Some products are in pipe.
Products In Pipe
Determining which products are “in pipe” involves four different parts:
- Store on hand
- Transit products
- Warehouse products
- Store on order
The first part is determining the store on hand (OH). Store OH represents the number of physical products already present at the store, ready for immediate sale.
Then there are in transit products, which are on their way to the store from a warehouse.
After that, there is store in warehouse products. Store in warehouse accounts for merchandise ready to ship to stores but has not left the fulfillment centers yet.
The last one is store on order products. Store on order products are pieces of merchandise that a store has ordered from the supplier but are still pending fulfillment.
Stores should be tracking in pipe items. When they do this, they will make sure that if there are none of that particular product in-store on hand, there are some in pipe at one of the stages listed above.
Ensuring stores have the products their customers desire means that business owners have to replenish their products to keep up with consumer demand. Replenishing stock begins with using the instocks data to determine how many units are necessary to keep up with the supply.
A way for businesses to figure out their replenishment needs is to create a supply plan. A supply plan measures the amount of an item necessary to have on hand to meet consumer demands. Supply plans depend on previous data from past years of consumer demand for a specified product.
For example, an item sold well during that same time the previous year. Let’s say Superbowl Sunday. A particular brand of well-known potato chips skyrocketed the weekend of the Superbowl the year prior. The supply plan would be to ensure that item is in stock at projected levels based on the year before.
The supply plan covers more than just the on-hand items and in pipe items. It accounts for the entire lifespan of a product. It follows the product creation to landing on the business’s store shelves.
Suppliers can create supply plans for short periods, multiple months ahead to years, based on their needs. To find more information on making a well-organized supply plan, check out our Supply Plan article.
While determining instocks has many parts, it’s crucial to consider all of the pieces to ensure that you will have enough products for your customers to purchase. When a business creates a supply plan and uses data from previous years, they are more likely to be well-stocked and make sales.
Visualize your instocks
Keep up your instocks with easy-to-use, actionable insights into your stores’ stock! Using the Walmart Inventory feature of Retail Intelligence, you can see your instocks, weeks of supply, and in pipe items at a glance.
Retail Intelligence – Walmart Inventory
See a map of stores with low stocks and potential missed sales to predict out-of-stocks.
Retail Intelligence – Walmart Out of Stock Predictor
Try it for free for 14 days to see your stocks!
Written by The SupplyPike Team
About The SupplyPike Team
SupplyPike builds software to help retail suppliers fight deductions, meet compliance standards, and dig down to root cause issues in their supply chain.Read More