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  • Writer's pictureValdas Puzeras

SUMATUS customers report Phantom Inventory as number one OSA issue


 

18 months ago, we launched a machine learning powered On-Shelf Availability (OSA) software for brick-and-mortar stores.

 

It attacks the following major OSA issues related to in-store operations:


  • Phantom Inventory. Accounting records include products which are not in the store or products that are in the store, but they are not appropriate for sale (damaged and expired products are not timely written off). In other words, these are stocks that exist only on paper but not in reality.

  • Stock in backrooms. Products are in the store, but not on the shelf. After receipt, they are still in the backroom or shelf replenishment is delayed during the day.

  • Visibility issues. Products are on the shelf, but shoppers do not see them. Products are hidden under other products, or products in small quantities are hidden on the back shelves, sitting very high or low on the shelves.

  • Price tag issues. Products are on the shelves, but the prices are incorrect, or the price tags are missing.

 

According to our customers’ response, Phantom Inventory is the number one OSA issue related to in-store operations. Customers indicate that it comprises about 85 percent of all events.

 

 


Why Phantom Inventory is a problem and how retailers are dealing with it in a classic way

 

This issue negatively impacts demand planning and ordering accuracy, resulting in permanent under-ordering, or not ordering inventory at all, ultimately resulting in lost sales and poor customer experience.

 

All stores, regardless of size and type of products they sell, as well as dark stores or distribution centers, have problems with Phantom Inventory.

 

The most common causes of Phantom Inventory are employee and shopper theft, damage, breakage, expiration, inaccurate data entry due to human error, system error, and calculation error.


The classic way of dealing with Phantom Inventory is a regular inventory counts, both wall-to-wall and of selected product groups or items. However, this method has two major drawbacks:

  • Phantom Inventory is determined late. Often, the gap between the OSA event occurrence and the physical inventory count is many days, weeks, or months. During that entire period, the store will lose sales and disappoint the shoppers.

  • Physical calculations require huge staff resources. During periodic inventory group counts and frequent wall-to-wall counts many products are counted that do not need to be counted. In this way, the employee's time is simply wasted.



How SUMATUS can help solve Phantom Inventory

 

SUMATUS on-shelf availability software is not a simple descriptive or diagnostic BI tool. It is prescriptive. This means that it detects OSA problems and provides alerts to act – specific lists of items to check. As a result, retailers can timely identify Phantom Inventory and other OSA issues, fix them, improve on-shelf availability and visibility, and restore sales. In addition, it helps reduce employee costs by saving their time spent on not necessary stock counts.


Our machine learning algorithms analyze all SKUs in all stores every day and identify OSA issues. Store personnel receive prioritized alerts to take action on a specific list of problematic items. SUMATUS also separates Phantom Inventory events from others and lists these items for automatic stock correction without inspection.

 

Simplicity of implementation is extremely important. It is the easiest go live in the world: minimum data required, go live in few days, employee training requires about 10 minutes. Combined with no investment need in visual recognition and a low monthly price, we guarantee payback from day one. Free of charge pilot is available as well.

 

Get in touch today find out how we can help you via the link below https://www.sumatus.eu/freedemo or contact +370 686 55047, +380 95 484 5439 or info@sumatus.eu

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