A lost sales analysis reveals how strategic inventory management can boost sales
A wholesale business struggled with excess stock and lost sales. Data analysis revealed the scale of the problem and showed a clear path to better inventory management.
The challenge
Nordic Tyre Group faced frequent inventory stockouts across all product categories and warehouses - frustrated customers turned to competitors and the scale of the problem was unknown.
Empty shelves meant lost sales
Nordic Tyre Group - a leading independent tyre distributor across the Nordic and Baltic markets - faced frequent inventory stockouts across all product categories and warehouses. This led to substantial lost sales, as frustrated customers turned to competitors.
Inventory management didn't predict demand
Existing inventory management processes were inefficient and failed to predict demand accurately. Every empty shelf was a missed order, and replenishment arrived at the wrong time.
The real scale of the problem was unknown
The situation needed a quick fix, but first the real scale of the problem had to be understood. Without a clear data picture, there was no way to know where to invest first.
What we built
We started from data - analysed history in depth and built a strategy based on value-driven inventory management and Theory of Constraints (ToC) replenishment.
- 01Diagnosis
Lost sales analysis
We performed an in-depth analysis of historical data to measure the revenue lost from stockouts, identifying which categories and SKUs suffered most.
- 02Strategy
Theory of Constraints strategy
We identified specific opportunities for improvement and created a strategic approach using value-driven inventory management and ToC replenishment. The approach looks at the whole supply chain as one system and ensures the right products are in the right place at the right time.
- 03Roadmap
Implementation roadmap and partner plan
The outcome was a clear solution roadmap for the client: what needs to happen, in what order and how. The work also included a concrete plan for selecting an implementation partner.
Results
The analysis revealed enormous potential: millions of euros in lost sales could be recovered.
Nordic Tyre Group could capture up to 65% of revenue previously lost due to stockouts by ensuring tyres don't run out at the wrong moment.
High-demand categories could see revenue grow by 75% with better inventory management.
Slower-moving categories show a 54% revenue increase opportunity.
Nordic Tyre Group received a clear plan to solve the problem - guidance on what partner is needed for implementing the optimized inventory system and how to make the selection.
Beyond the numbers
- The ToC approach was new to NTG but its power was convincing
- Data became the basis for optimizing the whole supply chain
