Preventing stock-outs in 2024: challenges and solutions for manufacturers
Persistent inflation: a source of tension
Rising prices for raw materials, transport and above all energy continue to weigh heavily on companies. For example, in 2023, COFIGEO had to temporarily halt production because of exorbitant energy costs. This persistent inflation directly affects production, supply and negotiation strategies with distributors, increasing the risk of stock-outs.
How can you reduce the impact of inflation on stock shortages?
To limit the impact of inflation, manufacturers need to focus on a number of areas:
- Energy efficiency and renewable energies: Reducing energy consumption by optimising production processes or investing in renewable energies can help limit costs in the long term.
- Negotiations with distributors: Greater transparency in negotiations with distributors is essential. Price and volume adjustments must be discussed proactively, to avoid tensions that could lead to stock-outs.
- Inventory optimisation: Inventory management needs to be optimised to take account of price volatility. The use of inventory management systems based on accurate forecasts can help anticipate fluctuations and avoid production decisions being made too late or cancelled.
Raw materials supply problems
Geopolitical and climatic crises continue to disrupt global supply chains. In supermarkets, basic food products such as wheat and oil are suffering the effects of crises such as the war in Ukraine. At the same time, the pharmaceutical sector is experiencing critical shortages of raw materials for the manufacture of essential medicines.
The French National Agency for the Safety of Medicines (ANSM) has reported almost 5,000 cases of stock-outs or risks of stock-outs in 2023, a figure 30% up on the previous year. The reasons vary: shortages of raw materials, quality defects, insufficient production capacity or fragmentation of production lines.
The impact of New Technologies
Optimising in-store stock management requires the integration of cutting-edge technologies. Solutions such as EasyPicky, which uses video image recognition, make it possible to monitor the state of shelves instantly and quickly identify potential stock-outs.
EasyPicky benefits include:
- Real-time shelf analysis: smartphone or tablet cameras can analyse shelves in a matter of seconds, providing comprehensive reports on stock levels.
- Sales force responsiveness: Thanks to the data collected, the sales force can act quickly to correct shortages and optimise strategic decisions.
- Automatic calculation of lost profits: EasyPicky can also estimate potential losses due to stock-outs, providing an overview of the priorities to be addressed in order to maximise sales.
Demand forecast management
Global economic instability has significantly affected consumer behaviour, making demand forecasting more complex than ever. In 2022, the panic buying of basic necessities demonstrated the importance of precise anticipation to avoid overstocking or stock-outs. In 2024, manufacturers can count on advances in Artificial Intelligence (AI) to refine their forecasts.
Artificial intelligence for forecasting
AI offers a predictive approach to inventory and demand management. Here are some of the key benefits of using AI:
- Analysis of consumption trends: AI can process large quantities of data, including consumption trends, climatic events and geopolitical factors, to predict variations in demand with a high degree of accuracy.
- Reduced overstocking and stock-outs: Thanks to better anticipation of requirements, manufacturers can adjust their production in real time, reducing the risk of overstocking or stock-outs.
- Supply chain optimisation: Using AI can improve supply chain management by adjusting supplies based on forecasts, limiting interruptions to production flows.
Integrating sustainability into stock management
In 2024, environmental issues can no longer be ignored. Whether in supermarkets or pharmacies, integrating sustainable practices is becoming an imperative to ensure the resilience of supply chains.
Sustainable solutions to prevent breakdowns
- Sustainable sourcing practices: Working with suppliers committed to sustainable practices can help to avoid certain interruptions in the supply chain, particularly by reducing dependence on non-renewable or endangered resources.
- Waste reduction: Optimising the management of production flows and stocks to minimise losses helps to reduce environmental impact and improve the stability of supplies.
- Working with eco-responsible partners: Joining forces with distributors or suppliers who share the same environmental values not only helps to meet the growing demand for ethical products, but also ensures greater resilience in the face of logistical challenges.
Collaboration between manufacturers and distributors: a key to avoiding stock-outs
Tensions between manufacturers, distributors and pharmacies are often the cause of stock-outs. Disagreements over prices or volumes can lead to temporary shortages, as was the case in supermarkets in 2022, when certain brands were withdrawn from the shelves following unsuccessful negotiations.
How to improve collaboration
- Transparency in negotiations: Manufacturers must provide clear and transparent justifications for price increases, in order to maintain a relationship of trust with distributors.
- Assortment flexibility: Offering greater flexibility in assortments, by favouring private labels for example, can help to reduce pressure on prices while ensuring product availability on the shelves.
- Highlighting technological innovations: By using technological solutions such as EasyPicky, distributors and manufacturers can work together to improve stock and assortment management.
