Phantom inventory is a common expression for goods that an
inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.
Inventory management is a discipline primarily about specifying the shap ...
accounting system considers to be on-hand at a storage location but are not available.
[A Comprehensive Guide to Retail Out-of-Stock Reduction in the Fast-Moving Consumer Goods Industry, Thomas W. Gruen, Ph.D., University of Colorado at Colorado Springs, USA and Dr. Daniel Corsten, IE Business School Madrid.] This could be due to the items being moved without recording the change in the inventory accounting system, breakage,
theft
Theft is the act of taking another person's property or services without that person's permission or consent with the intent to deprive the rightful owner of it. The word ''theft'' is also used as a synonym or informal shorthand term for some ...
, data entry errors or deliberate
fraud
In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compens ...
. The resulting discrepancy between the online inventory balance and physical availability can delay automated reordering and lead to out-of-stock incidents.
If not addressed, phantom inventory can result in:
* Lost sales
* Inaccurate assessment of store or product sales performance
* Reduced accuracy of demand forecasts and plans
* Broader accounting issues and restatements
A number of techniques have been used to correct phantom inventory problems, including physical cycle counts,
RFID
Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. An RFID system consists of a tiny radio transponder, a radio receiver and transmitter. When triggered by an electromag ...
tagging of items and statistical modelling of phantom inventory conditions.
See also
*
Inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.
Inventory management is a discipline primarily about specifying the shap ...
*
Inventory control system
Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock". It is the process of ensuring that the right amount of supply is available within a business. However, a more focused definition takes into acco ...
*
Inventory management software
Inventory management software is a software system for tracking inventory levels, orders, sales and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other production-related documents. Co ...
*
Operations management
*
Supply chain management
In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and stor ...
*
Warehouse management system
References
{{Reflist
External links
*''Consumer Goods Technology'' Systemically Reduce Out-of-Stocks through the Elimination of False Positive
* ''The Wall Street Journal'' Guest Voices: Retail’s Phantom Inventory Menace, or the Ghosts of Holidays Presen
*''Alloy'' Phantom Inventory, and What Makes It So Scar
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