Inventory pain often arrives through customers — a dormant account suddenly orders, or a top account shifts mix toward low-margin lines. RFM segments client behavior from your ERP history.
The three dimensions
- Recency — how recently did they buy?
- Frequency — how often do they order in a defined window?
- Monetary — revenue or margin contribution in that window
Why ops should care
A "high monetary, low recency" account may be about to churn — the stock you hold for them is at risk. A "rising frequency" account on promotional SKUs may drive stockouts on shared catalog lines.
Link clients to SKU risk
When a SKU flags for stockout, attach top accounts by recent pull. Sales gets context; purchasing avoids blind over-ordering "for everyone."
Keep it operational
Skip complex scoring models at first. Use quartiles on each dimension, name four segments, and review monthly. Refine weights when you see repeated false alarms.