What is phantom stock?

Why phantom stock happens

A store's stock figure is a calculation, not a count. It starts with what was delivered and subtracts what was scanned at the till. Anything that leaves the store without being scanned, or arrives differently from what was booked in, makes the figure wrong.

• Theft and shrinkage: the stock walked out without passing a till.
• Damages: broken or expired stock thrown away without being written off.
• Receiving errors: a delivery booked in that was short, or never arrived.
• Scanning errors: a cashier scans one flavour or size for another, so one line looks sold and the other looks unsold.
• Stock in the wrong place: still in the storeroom, or on the wrong shelf, so shoppers cannot find it.

Why it matters more than an ordinary out-of-stock

An ordinary out-of-stock shows up as zero stock, and most replenishment systems react to it. Phantom stock hides. The system sees units on hand, so the automatic reorder never triggers. The shelf stays empty, sales stay at zero, and nothing in the standard reports looks wrong. It can last until someone physically counts the stock.

For a supplier, that means lost sales that never appear as a problem. Worse, the zero sales can make the line look like a slow seller, and slow sellers are the first candidates to be delisted.

How to find phantom stock in sell-out data

Phantom stock cannot be seen in stock figures alone, because the stock figure is the thing that is wrong. It shows up when stock is read next to sales. The tell-tale pattern is a line that normally sells, with stock on hand, that has stopped selling.

• Stock on hand is above zero.
• There have been no sales for a number of days.
• At the line's normal rate of sale, it should have sold several units in that time.
• Similar stores are still selling it, so it is not simply a dead line.

Ranking these by the sales they should have made puts the most expensive cases first. The longer a line has gone without a sale, and the faster it normally sells, the more likely the stock is not really there.

How to fix it

• Send someone to count: a rep or merchandiser checks the shelf and the storeroom.
• If the stock is in the storeroom, get it onto the shelf.
• If the stock is not there, ask the store to correct its stock figure, so the system reorders.
• Record what was found, so repeat offenders and their causes become visible.

How OuterJoin helps

Phantom stock is one of the core lists on every OuterJoin store report, and a scheduled phantom stock report goes out per retailer channel every two weeks. Reps see which lines to count in which store, type in what they actually found, and send the result to the store manager so the stock figure gets fixed.