Out-of-Stock Scenario Solutions

Client Profile: Digital and Physical Presence

The client, a foremost department store chain in the US, operates over 1,000 department stores nationwide. Besides the brick-and-mortar outlets, they maintain a distinct e-commerce channel with exclusive merchandise. Their e-commerce portfolio includes both seasonal fashion products and year-round basic items. Despite their broad reach, they grappled with inventory challenges, particularly products that remained OOS for extended periods.

Tackling Lost Sales with Strategic Insights

Mu Sigma identified through the in-stock metric that many products frequently went Out of Stock (OOS), causing significant sales losses for the client. Leveraging our Art of Problem Solving (AoPS) system, we devised a self-service dashboard. This tool allowed the client to pinpoint lost sales due to OOS, leading to enhanced inventory management, improved online customer experience, and diminished customer churn. By understanding the interconnectedness of various business challenges, we provided a comprehensive view of the cascading effects of OOS, which earned us referrals within the client’s organization.

A First-principles Approach to Inventory Management

Applying the AoPS system, we embraced first principle thinking and began mapping the interconnectedness of various business challenges. Using muPDNA™, we meticulously defined the problem, pinpointing key factors and analyzing the linked hypotheses. This led us to discern the impact of weekday versus weekend demand and seasonality on product availability. A heuristic methodology then helped gauge average sales for all SKUs. Subsequent quartile analysis pinpointed underperforming products, leading to recommendations for inventory reallocation to bolster sales. The self-service dashboard we developed provided detailed metrics across product hierarchies. Finally, we unveiled the intricate web of interconnected challenges on our muUniverse™ platform, granting the client deeper insights into how OOS affected multiple business units.