Explore Our Category Management Insights.

We’re here to help. Get free education, tips, and inspiration to help you refine and grow your product categories.

Subscribe To Our Weekly Newsletter

Subscribe Here!

Featured Post

Recent Posts

5 Factors That Influence Your Days of Supply

DOS Factors.jpg

Understanding how quickly (or slowly) the stock on your shelves decreases is crucial if you want to please your customers. In fact, it's not just your customers who will benefit. In knowing your days of supply or DOS for short, you’ll know how many days your current inventory will last based on your sales data.

That, in itself, will help you as a retailer to not only plan better going forward, but it’ll also keep you in line with customer demand.

We’ve already written about how your days of supply can improve your retail operations. But we haven’t yet focused on the factors that can influence your days of supply.

Seasonality

Regardless of what type of retail store you are, there will be periods during the year where you will sell more products than others. Commonly referred to as seasonal products, they can either be sold during a time period as denoted by calendar seasons (winter or summer) or for commercial reasons (Easter or Christmas).

For example, during the summer, you’d expect your customers to spend more time outdoors. That means if you sell charcoal for braais or barbecues or beach gear, you can expect more sales during these months. Thus, these products would have a lower DOS as they move off the shelf fairly quickly.

Meanwhile, if you also sell heaters, you should expect to have a lower DOS for these products during your winter months.

How to ensure your DOS remains at an optimum level

To ensure that your DOS remains at an optimum level through the year, you need to create a seasonal planogram. This planogram will then reflect the DOS for that specific time frame so that the amount ordered would be in line with your customer demand.

For example, if you sell hot cereals, you need to ensure that you place more orders for those months when it’s colder and the demand would be higher so that you don’t have to restock your shelf too often.

Out of stocks

Your out of stocks will influence your days of supply simply because it works on how many units have moved within a certain time frame.

For example, let’s assume you have a fast-selling product that sells 100 units a month and you need to stock it all year round. Let’s say you have 50 units of that unit on the shelf so your DOS for the month is 15. But what happens if, for two months of the year, you have no stock? Then you’ve only sold 1000 units. That means your DOS actually goes up.

Just to note, whenever stocking your gondola, you do need to ensure that the days of supply for each of your products are as close as possible to the overall DOS of your gondola. That way, your shelves will empty out evenly over time rather than haphazardly,

How to ensure your DOS remains at an optimum level

The easiest way to overcome this is to keep those months in mind when the item was out of stock. You can then factor this into your calculations going forward.

Let’s use the above example. If you’re using 10 months of sales data for the item, it would give you a better understanding of its DOS when compared to its average performance and you can factor that in when ordering.

Cross Promotion

In cross-promoting an item across two different areas, you’re essentially enticing your customers to buy more of it. As a result, you can expect a lower DOS for this product.

However, you do need to be careful here. Cross-promotion can result in an increased demand for that particular item. The result is an inflated idea of how well the product is selling as it’s connected to another product or products which could be more popular.

How to ensure your DOS remains at an optimum level

For your cross-promotions, a record must be kept since the higher sales data can potentially skew the actual space the product deserves on the shelf.

Knowing how promotions affect a certain SKU can help you to ensure that you don’t apportion too much space to this item. Unless a plan exists to promote the product again, the sales data from that period must be considered to work out the days of supply while cross-promoting.

Clearance Lines

Similar to your cross-promotions, your clearance lines are usually heavily marked down as a means to get rid of certain products. As such, if your data is given from a time frame when an item was on clearance, it would be considered a good mover.

This is, of course, not always true. The reality is that the product was sold for a short period of time and at a low margin. Thus, you wouldn’t necessarily want to order a large quantity when it isn’t on sale or promotion.

How to ensure your DOS remains at an optimum level

By keeping note of which clearance lines happened when, it will make it that much easier to determine the true demand for a particular product.

In this case, you would need to remember that it sold well for a short period of time and will most likely not be repeated. With less demand for such an item, you would need to take that into account when determining your days of supply.

Discontinued Lines

Your discontinued lines remain on the shelf until you run of out stock before being removed from your planogram. That is why you need to always be aware of what is going on in your store.

For example, if you’re a pharmacy retailer, Product A could be discontinued due to the Department of Health not agreeing with the quality of its main ingredient or the pack size. That means that while Product A might have sold well, it will be discontinued.

Thus, in your data, you’d have a high seller but it will no longer be on your planogram, which means your days of supply would become irrelevant. In its place, you might have a smaller pack size of that item, which could sell twice as fast.

The same could be said for your slow sellers. When discontinued, while the data would still reflect its sales rate and indicate it would need to be reordered, the reality is that none will be ordered.

How to ensure your DOS remains at an optimum level

By ensuring that you are aware of which products will be discontinued, you’ll know which products not to order again.

To fill any gaps that will come about from discontinued lines, you’d need to do a little market analysis as well as logical thinking. In analysing the products that are similar to the discontinued one, you can locate the next viable alternative, taking into account the pack size, brand and so on to determine the demand and how your DOS would be affected by the change.

Conclusion

The magic of DOS is that you can easily see which products deserve more space and which deserve less. If you’re working with a category (one planogram), for example, you also have the ability to see the overall DOS of that gondola.

That makes the task of replenishing your gondolas that much easier. Without knowing your DOS, you stand a greater chance of out of stocks, loss in profit, and unhappy customers.

Darren Gilbert

With over 10 years of writing and marketing experience, Darren joined DotActiv in 2017 as a content writer where he was responsible for producing blogs, Ebooks and more. He has since worked himself up to the role of content manager, where he oversees all and any content produced by the company.

New call-to-action

 

DotActiv Book a Consultation

Categories

see all

 

From Facebook