The Tyranny of Inventory Systems and The Customer Experience

Aug 21, 2018 The Tyranny of Inventory Systems and The Customer Experience

I have noticed in my own life that common items I depend on such as vitamins, toilet paper, crackers, etc. are increasingly out of stock, sometimes for long periods of time – weeks or even months.  I suspect that some of this is related to the unpredictability of sales colliding with the desire to keep inventory levels low.  As a management consultant, I fully understand that inventory ties up cash and that too many of a slow selling item is not good.  Items can spoil or become damaged or just die a slow death due to changes in consumer preferences.  And in general, you want to have in stock more of what is selling well, and drop items that are slow selling.

However, I have identified another problem – stuff that is out of stock that is never refilled even though the space on the shelf is empty.  At its most basic function, inventory systems are used to keep track of inventory on hand.  They are much more than that of course.  One function that many companies depend on is to track sales of each item, and automatically determine when specific items need to be replenished.  The over reliance on having a computer do all the ordering can be a bad thing however.

I did some poking around this problem.  I was looking to buy a specific kind of chocolates.  It was out of stock for several months at my local CVS pharmacy.  I asked about it several times but they never came in.  Finally, I escalated it to the manager who checked what the computer indicated about the inventory level.  It said they had 3 bags and he could not order any.  I don’t know if they ever solved the problem by getting someone with enough authority to make an inventory adjustment.  So I shopped around and found them at Walmart.  The regular price at Walmart was $3.29.  The price at CVS was $5.49.  Guess who just lost a customer?

While my example above may not be something you sell, I have found this situation many times and in many other circumstances.  So for all my small business readers – Pay more attention to your inventory levels.  Walk around and see what is out of stock and check to see what the count on hand is in your inventory system.  Take some action if warranted.  Tell your staff not to ignore customer inquiries about an out of stock item but to put them on a list of things to check.  Customers don’t want to be inconvenienced.  Customers will give up on you and you don’t want that.  Make sure you consistently deliver a great customer experience.

Bryan Mason

Apollo Consulting Group, Newport, RI