Lost Sales: To Post or Not to Post

When I train folks in the parts supply industry or when I'm contacted for advice, particularly when it involves the subject of lost sales, I like to challenge their thinking. There are soooo many schools of thought when it comes to lost sale posting. Trying to determine the best thing to do can get a little confusing. It can even cause you to take the gas pipe (a favorite saying of mine when things start to spiral out of control or get confusing beyond comprehension.) Anyway, here's another log on the fire. Think about the special order parts that are not prepaid that customers never come back for. You don't know why the customer didn't come back. But, you do know there was a demonstrated demand for the part, particularly if it was determined that the part was needed when the problem was diagnosed in your own service department. So what now? Does it make sense to record this unsold special order part or parts as lost sale(s). Some say, no way! A certain percentage of these customers are going to return and now you have overstated demand possibly leading to stocking errors and overages. Some say, Yes! The idea is to capture total demand. This is the only way you can keep your inventory customer responsive. Besides inventory control system settings and good judgment can help manage aggressive lost sale posting. Some say, no clue. This gray area of whether or not to post unsold special order parts as lost sales can be perplexing. But, think hard and carefully about it. It can be the difference between a profitable inventory and a unprofitable inventory. What do you think?