Percentage of Sales Lost Due to Supply Issues

Percentage of Sales Lost Due to Supply Issues

KPI Details

Percentage of Sales Lost Due to Supply Issues measures the company's ability to stock inventory that is in demand from its customers. A high value for this KPI suggests that the company has inaccurate demand forecasting, poor inventory control or sub-par vendor management procedures. Companies that have a high rate of lost sales due to supply issues are not only losing revenue from being out of stock, they are also likely creating dissatisfaction or perhaps even mistrust from their customers due to an inability to supply customers with products when they need them, which can lead to customer attrition.

KPI Definition

The total dollar value of sales lost due to the supplier being out of stock divided by the total dollar value of customer sales over the same period of time, as a percentage.

KPI Best Practices

• Anticipate peak sales and seasonal demand months in advance
• Perform cycle counts on a regular basis to maintain accurate inventory levels
• Set levels of safety stock that are high enough to last through increased demand

KPI Calculation Instructions Percentage of Sales Lost Due to Supply Issues?

Two values are used to calculate this KPI: (1) the dollar value of sales lost due to the company being out of stock, and (2) the total dollar value of customer sales during the same measurement period. Lost sales should be defined as any order that was placed to the company that was neither fulfilled nor placed on backorder due to the company being out of stock. Only include sales that were fulfilled (including backorder sales) in the denominator of this calculation.

KPI Formula :

(Dollar Amount of Sales Lost Due to Supply Issues / Total Dollar Value of Sales) * 100