Estimate the annual cost of stockouts at your company in 2 minutes. Most teams under-count by 3-5x because they only see the lost sale, not the gross margin, the customer churn, and the expedite cost.
About your business
Total annual revenue, top line.
Gross margin (revenue minus direct cost), as a percent.
Of order lines requested, what percent cannot be fulfilled on time? Industry average for mid-market: 3-6%.
The rest is permanently lost revenue. Industry average: 50-70%.
Air freight, overtime, line-changeover, etc. Typical: $200-$1,500.
Each lost order also damages future revenue from the same customer. Conservative: 3-5x the lost order value.