What is a shortage?
The shortage is a shortage of one item.
Shortage costs arise from different factors. In the demand of a production, the shortage costs can be very high in case of a shortage. A shortage can even cause a complete shutdown of production. The costs can be in the millions. Loss of orders, delayed deliveries, interruption of supply chains, switching to the competition are the consequences in this case.
In shipping logistics, the service level for customers is poor when a shortage occurs. Subsequent deliveries are annoying and cause additional costs. The shortage costs can be enormously high due to complete switching of the customer to the competition.
Why do shortages occur?
Shortages are caused by incorrect materials management and faulty procurement. The cause is: too small book inventory compared to the demand (wrong business management). Also the stock outflow and the expected value in the demand can also be wrongly estimated.
The occurrence of shortages can also be caused by errors made by the suppliers in the quantity-based supply.
- wrong disposition
- Incorrect receipt of goods (wrong product delivered)
- faulty planning and materials management
- incorrect stock levels due to errors in picking
- Information deficiencies
In a warehouse, the shortages in picks and retrievals occur directly due to incorrect picking. In order to reduce the missing quantities, several technical systems can be used: Pick-to-Light, Voice Picking, Pick-by-Point, Pick-by-Frame, etc.
Consequences of a shortage
A shortage can have very different effects (here only as an example):
- Stop of production, delivery delay and material bottlenecks
- Subsequent deliveries at a later date
- Price reductions due to the difference
- High shortage costs
- often a manual material search
- Disturbances in the production process
A shortage causes shortage costs, delivery delays, material bottlenecks and should be kept to a minimum in inventory management. Production interruptions are the consequences. If the inventory is too small, there is a delay in delivery in the order (shortfall). The occurrence of material shortages is always very important for companies.