Out-of-Stock Scenario Solutions
Mu Sigma developed a self-service dashboard that optimized the client's inventory management, preventing lost sales due to out-of-stock (OOS) scenarios and significantly boosting sales.
Client Profile: Digital and Physical Presence
The client, a foremost department store chain in the US, operates over 1,000 department stores nationwide. Besides the brick-and-mortar outlets, they maintain a distinct e-commerce channel with exclusive merchandise. Their e-commerce portfolio includes both seasonal fashion products and year-round basic items. Despite their broad reach, they grappled with inventory challenges, particularly products that remained OOS for extended periods.
Tackling Lost Sales with Strategic Insights
Mu Sigma identified through the in-stock metric that many products frequently went Out of Stock (OOS), causing significant sales losses for the client. Leveraging our Art of Problem Solving (AoPS) system, we devised a self-service dashboard. This tool allowed the client to pinpoint lost sales due to OOS, leading to enhanced inventory management, improved online customer experience, and diminished customer churn. By understanding the interconnectedness of various business challenges, we provided a comprehensive view of the cascading effects of OOS, which earned us referrals within the client’s organization.
A First-principles Approach to Inventory Management
Applying the AoPS system, we embraced first principle thinking and began mapping the interconnectedness of various business challenges. Using muPDNA™, we meticulously defined the problem, pinpointing key factors and analyzing the linked hypotheses. This led us to discern the impact of weekday versus weekend demand and seasonality on product availability. A heuristic methodology then helped gauge average sales for all SKUs. Subsequent quartile analysis pinpointed underperforming products, leading to recommendations for inventory reallocation to bolster sales. The self-service dashboard we developed provided detailed metrics across product hierarchies. Finally, we unveiled the intricate web of interconnected challenges on our muUniverse™ platform, granting the client deeper insights into how OOS affected multiple business units.
Business Impact
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$90M
Increase in sales
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Boosted Satisfaction
Minimized OOS products
Mu Sigma is a pure-play decision sciences company that believes the big D is Decisions, not data. Our integrated ecosystem of products, services and cross-industry best practices, Mu Sigma enables better decision-making for more than 140 Fortune 500 clients. Mu Sigma's unique interdisciplinary approach and application of AI, ML, computer vision and more drive innovation in solving high-impact business problems across sales, marketing, finance, operations, and supply chain. With over 3,800 decision scientists and experience across 12 industry verticals, Mu Sigma has been consistently validated as the preferred Decision Sciences and Analytics partner.
The firm's is derived from the statistical terms "Mu" and "Sigma," which symbolize a
probability distribution's mean and standard deviation, respectively.
