What is a shortage?
The shortage is a stock shortage of an item.
shortage costs
Shortage costs arise due to various factors. In production, shortage costs can be very high in the event of a shortage. A shortage can even cause production to come to a complete standstill. The costs can amount to several million. Loss of orders, delivery delays, interruptions in supply chains, and switching to competitors are the consequences in such cases.
In shipping logistics, the level of service for customers is poor when shortages occur. Subsequent deliveries are annoying and cause additional costs. The costs of shortages can be enormous if customers switch to competitors altogether.
Why do shortages occur?
Shortages arise due to incorrect materials management and faulty procurement. The cause is insufficient stock levels in relation to demand (incorrect business management). Stock depletion and the expected value of demand may also be incorrectly estimated.
The occurrence of shortages can also be caused by errors on the part of suppliers in quantity-dependent supply.
- incorrect disposition
- incorrect goods received (wrong product delivered)
- Inadequate planning and materials management
- Incorrect stock levels due to picking errors
- lack of information
In a warehouse, shortages arise directly during picking and removal due to incorrect order picking. Several technical systems can be used to reduce shortages: pick-by-light, Voice Picking, Pick-by-Point, Pick-by-Frame, etc.
Consequences of a shortfall
A shortage can have very different effects (here only as an example):
- Production stoppages, delivery delays, and material shortages
- Subsequent deliveries at a later date
- Price reductions due to the difference
- High costs of missing quantities
- often a manual material search
- Disruptions in the production process
Conclusion
A shortage causes shortage costs, delivery delays, material bottlenecks, and must be kept to a minimum in inventory management. Production interruptions are the result. If the stock level is too low, there will be a delivery delay in the order (shortfall). The occurrence of material bottlenecks is always very significant for companies.
