Managing Stock in Trade


Managing Stock in Trade. Declining forward and backroom stock, and growth in the incidence of stockouts are indicators of supply issues or loss of distribution.

Exhibit 30.12   Declining forward and backroom stock, and growth in the incidence of stockouts are indicators of supply issues or loss of distribution

The following metrics are useful in managing stocks in the lower trade segment:

  • Forward stock: This refers to stock in the store’s selling area which can easily be accessed by customers. It includes stock placed on shelves, special displays, shop floor space, chillers, freezers, cabinets, and other visible areas.
  • Total stock: This represents the sum of stock in the store’s selling area and the backroom or storeroom.
  • Stock cover (stock cover days): This metric calculates the number of days that the available stock would last, assuming sales continue at the same rate. It provides an estimate of inventory sufficiency.
  • Out of stock: This measures the percentage of stores handling the product during the reporting period but having no stock available at the time of stock count. It indicates instances where demand exceeds supply.

These metrics are commonly used in the lower trade (non-scan) channels, and retail audit data supports their analysis. While some retailers in scan channels track these metrics, the information may not be readily available. However, with the adoption of technologies like radio frequency identification (RFID) tags, collating and maintaining such information will become easier in certain sectors.

Declining forward stock and an increase in stockouts are warning signs that both manufacturers and retailers should pay attention to. These metrics indicate potential supply issues or a loss of distribution.

It is important for stock cover to be significantly greater than the manufacturer’s sales cycle or the retailer’s procurement cycle. If stock cover days fall below the average sales cycle, the incidence of stockouts will soar.

Observing trends in forward stock and the distribution of stockouts can reveal supply and stock management issues within the trade. For example, Exhibit 30.12 illustrates a brand experiencing supply shortages, leading to a reduction in inventory and a high frequency of stockouts. Between January and September, the stock levels in the channel decreased from 2,176 units to just 251 units, while stockouts rose from 11% to 24% during the same period.

By monitoring and analysing these metrics, manufacturers and retailers can identify potential challenges and take proactive measures to improve stock management and ensure adequate supply to meet customer demand.


Previous     Next

Use the Search Bar to find content on MarketingMind.







Marketing Analytics Workshop

Marketing Analytics Workshop

In an analytics-driven business environment, this analytics-centred consumer marketing workshop is tailored to the needs of consumer analysts, marketing researchers, brand managers, category managers and seasoned marketing and retailing professionals.


Digital Marketing Workshop

Digital Marketing Workshop

Unlock the Power of Digital Marketing: Join us for an immersive online experience designed to empower you with the skills and knowledge needed to excel in the dynamic world of digital marketing. In just three days, you will transform into a proficient digital marketer, equipped to craft and implement successful online strategies.


Online Apps to train Category Managers

Online Apps to train Category Managers


The Plannogrammer is an experiential learning facility for category managers, trade marketers, and retailers in consumer markets. Ideally suited for hybrid learning programmes, Plannogrammer imparts hands-on training in the planning and evaluation of promotions and merchandising.

It supports a collection of simulation and analysis platforms such as Promotions and Space Planner for optimizing space and promotions, Plannogram for populating shelves and merchandising, a Due To Analysis dashboard that decomposes brand sales into the factors driving sales, and a Promotion Evaluator to evaluate the volume, value and profit impact of promotion plans.