How to Reduce Overstocking & Stockouts in 5 Simple Steps

If you are a part of the e-commerce industry, chances are you must have faced issues of stock shortage and overstocking.

With the boom of e-commerce, every industry experienced growth in sales/orders online at a phenomenal rate. Products are now available 24/7 in front of customer’s eyes, ready to be purchased.

With products being shipped 24/7 every second of the day, the percentage of error that supply chains had earlier increased phenomenally as well. This led to companies maintaining large warehouses with products ready to be shipped at moment’s notice.

The majority of time in a warehousing industry is consumed in stock management. For a successful and profitable e-commerce business, it’s mandatory that products are shipped without a delay. For products to be shipped on time, inventory manager needs to be aware of stock’s location in the warehouse.

For every stock which is not found is considered as a loss in the warehouse industry because the time and resources required to find it makes it even less profitable. So, tackling two of these most common problems right way in inventory managed environment can make it or break it.

Stock-outs & Overstocking Losses

As industries are coping with the problem of scaling their warehouses effectively, there are loses which accounts for as much as $1.1 Trillion dollars.

Overstocking losses to $471.9 billion  & Stock Shortage losses to $634.1 billion were accounted which shows how basic needs of a supply chain are mismanaged and needs serious attention.

Overstocking & Stockouts

For a company or enterprise to sell efficiently, the availability of products is a must and for them to make profits, overstocking & stock-outs must be eliminated.

Before we discuss the solutions to these problems, we must focus on the factors which are causing these problems and prevent it from happening over and over.

IoT as a Solution

Both stock shortage and excess stocking happen when you lose track of your inventory. The stock that doesn’t sell keeps piling up over time, consuming unnecessary space which in fact is a tied up capital. On the other hand, the orders that are sent out of the facility without being mapped properly results in stock-outs.

Inventory planning is the first step in ensuring a healthy warehouse facility to keep track of all the products In & Out of the facility the but all of this will turn out useless if you don’t have an effective tracking system in place.

RFID and barcode are the standards in most of the warehouses today but with the entry of IoT, things are changing.

IoT Sensors Pushing Data On Cloud

The basic barcoding will work only when a person or machine manually scans a product which is then updated in the system. IoT sensors generate ample amount of data which can provide you real-time location of the assets and actionable insights.

IoT will help you reduce stock-outs by giving you the status of stock movements which in combination with ML and AI generate alerts whenever a product is moved from its location or goes out of the configured area which gets updated in the system.

Overstocking is caused when you aren’t aware of how long the products have been idle. BLE based IoT sensors can provide the longevity and idle stick details at most granular levels and can be used to proactively dig out patterns of overstocking that may occur in future and help in future proofing the planning at all levels in a warehouse/store.

Integrating IoT with your current warehousing facility can help you to not only identify the problem causing factors but also help you eliminate them effectively based on data. 


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