A stockout occurs when a business cannot supply an item from available inventory when demand is due. It may create a backorder, lost sale, production stoppage or substitution, depending on the operating context and customer promise.
What causes a stockout?
Causes include demand above forecast, late replenishment, inaccurate inventory, quality rejection, supplier failure, transport delay, incorrect reorder settings and stock held at the wrong location.
How should the event be measured?
Define whether the measure counts affected lines, units, orders, days or demand value. Record the period and eligible population so trends remain comparable.
What is the business impact?
Impacts can include lost margin, expedited freight, production downtime, customer penalties and service damage. The most important consequence depends on the item’s role and available substitutes.
How can stockouts be reduced?
Improve inventory accuracy, update lead times and demand parameters, use suitable safety stock, monitor supplier performance and identify critical items with longer recovery paths.
What should be investigated?
Trace the shortage to its root cause rather than automatically increasing inventory. A stockout caused by record error or receiving delay needs a different correction from genuine demand variability.
