A customer has money, wants a product, but you can’t give it to them. This is one of the hardest parts of business. Not only because you feel the pain of lost revenue, but also because demand is fickle.
Your business can plan for seasonal demand, such as a boost in Christmas tree sales in December. But some demand surges are a result of unforeseen situations even the most optimized supply chain cannot anticipate.
This year a video of a mom wearing a Chewbacca mask went viral with 54 million views in a day. The rush to buy that mask consumed all the inventory at Kohl’s, Wal-Mart, Toys R Us and Amazon.
Admittedly, few products have this type of market demand, but every business should protect itself from running out of stock from regular demand. Peter Drucker, legendary management consultant, said: “What gets measured gets managed.” Knowing the right measurements will give you the information to ensure you maintain sufficient inventory.