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Dan Gilmore from SC Digest hits home with his latest editorial showing how the low inventory strategy is failing businesses because consumers can-t buy what they want which means lost revenue. This alone highlights how ineffective inventory management can impact revenue, not to mention the consumer. I've posted it below.

Expert Insight: Gilmore's Daily Jab
Supply Chain Comment: Are Retailers Shooting Themselves in Foot with Low Inventory Strategies?

By Dan Gilmore
SC Digest
Running Lean is One Thing in these Times, but Increased Stock Outs have to be Causing Lost Sales and Profits

The recession has caused almost everyone to cut back on inventories, due to both a concern about customer demand and also because right now -cash is king,- and inventory uses up cash.
Nevertheless, I think many retailers may be taking it much too far, and costing themselves sales and profit as a result. Three recent personal anecdotes I hope make the point:

• Two weeks ago I went in a large mass merchant to purchase some mini-DVD tapes for our video work. Virtually every peg was empty. The only ones with product available were terrible deals. An associate there said they hadn-t received inventory in that area -for several weeks.- I walked out without a purchase - as I assume many others have as well.

• At a different mass merchant just this weekend, I needed to buy a gallon of anti-freeze for one of our cars. The shelves were simply decimated. In fact, I assume intentionally, they had taken some of the product that was still available (higher priced -extended life- anti-freeze) and moved it around to make it look like the shelf facings weren-t totally empty. That of course resulted in that product being placed above shelf labels that were for different, lower priced SKUs. I went down the street to an auto parts specialty store that had plenty of inventory and bought a gallon for $11.00.

• I was also at a major office products retailer this weekend. In addition to the usual no help for what I was looking for, as I was checking out I heard a woman at the service counter say this was the third time she had come to the store in the past few weeks looking for some item, and yet again it was out of stock.
Running -Lean- can be a good thing, and inventory management right now is a critical discipline. But from my view, many retailers have gone way beyond smart inventory decisions to ones that are detrimental not only to their own results but also to those of their suppliers.

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