The Procurement Glossary » Stockout
Stockout
Inventory & Logistics
Definition
A situation where an item is unavailable because inventory has run out, disrupting operations or sales.
Explanation
Stockouts cause lost sales, downtime and expedite costs, and damage service and reputation. Their frequency is a core inventory KPI; safety stock and reliable replenishment exist largely to prevent them.
Example
A stockout of a key part halts the production line until an expedited delivery arrives.
Related terms
- Safety Stock — Extra inventory held as a buffer against variability in demand or supply, to reduce the risk of stockouts.
- Reorder Point (ROP) — The inventory level at which a replenishment order should be placed to avoid running out before it arrives.
- Fill Rate — The percentage of ordered quantity a supplier delivers from stock without shortfall or backorder.
- Expediting — Proactively chasing a supplier to ensure an order is delivered on time, especially when a delay would disrupt operations.
Frequently Asked Questions
What is Stockout?
A situation where an item is unavailable because inventory has run out, disrupting operations or sales. Stockouts cause lost sales, downtime and expedite costs, and damage service and reputation. Their frequency is a core inventory KPI; safety stock and reliable replenishment exist largely to prevent them.
Can you give an example of Stockout?
A stockout of a key part halts the production line until an expedited delivery arrives.
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