When reordering product becomes a task that can no longer be done in your head or via a quick survey of current inventory, you generally have reached the useful end of most inventory software as well. Most low end software doesn’t have any real inventory management features beyond setting min/max levels and spitting out a report for any products below the min level.
But for businesses that depend on their inventories to make money, such as wholesalers and distributors, reordering logic can have serious consequences if done incorrectly. And given the number of variables that can be at play (number of products, lead time, shelf life, seasonality minimum order quantities, run rates, forecasts, carrying costs, exchange rates, etc…) it is beyond the scope of what any human can do well in their head.
As an example, we developed an ‘Order Aid’ form for one of our clients along with a color coded inventory projection by week for each item they carry (see figure below). The order aid compiles historical data from the past year, which includes seasonality. It then takes into account vendor lead times (which vary from 1 to 12 weeks) and average expiration dates (which can be as little as 4 months) to provide suggested order quantities. The user can then apply any knowledge to override those quantities and when satisfied, presses a button and it automatically creates purchase orders based the lowest cost vendor for each item.