Inventory planning
Stockout
By the Supply Chain Manager team · Updated October 16, 2026
A stockout happens when a SKU has no available inventory to fill demand, so orders are backordered, lost or substituted.
The visible cost is the missed sale. The hidden costs include expediting fees, split shipments, staff time spent apologizing and customers who quietly move part of their spend to another distributor.
A stockout at one warehouse while another holds plenty is still a stockout for the customer it was meant to serve. That is why stock-out risk is best tracked per warehouse.
Stockout example
Illustrative numbers: a SKU sells 30 units a day at $12 margin each and is out for 5 days. If half of those customers wait and half buy elsewhere, the direct lost margin is 75 units × $12 = $900, before expediting or the risk of losing the account.
Why stockout matters for distributors
Most stockouts are visible days in advance: days of supply falls below supplier lead time. Catching that early leaves time to reorder, expedite or transfer instead of explaining a missed delivery.
Common stockout mistakes
- Only noticing a stockout when a customer order fails.
- Recording demand during a stockout as zero, which makes future forecasts too low.
Stockout in Supply Chain Manager
Supply Chain Manager flags stock-out risk when available stock is zero or will last 3 days or fewer at the recent sales pace, per SKU and warehouse.
Open the live demoExamples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.