What is inventory restocking?
Restocking inventory describes the process of replenishing products at an appropriate time and location depending on the demand and forecasted sales of each item.
It leads to efficiency when done properly, guaranteeing that you don't miss any sales chances without overstocking. Overstocking should be avoided due to it will result in higher holding costs, dead inventory, and other inventory problems.
Restocking inventory involves more than just ordering more goods from a vendor and stocking it in the warehouse. It demands precise inventory allocation and demand insights, as well as knowledge of production cycle time and how long it takes to collect and keep inventory in order to be ready for future sales fulfillment.
Guidelines on how to set the stock level to a more efficient stock control
1. Set a Min and Max Quantity
Min Qty means the minimum balance that you want to hold for that particular stock item. This is the lowest amount that you want to maintain at all times so when the number goes below this predetermined level, you know that it is time to order more! While Max Qty means that the maximum balance that you want to hold for a particular stock item.
How to determine the Min and Max Qty? Firstly, you need to determine the lead time when setting the min/max quantity. If the stock takes a month to reach you from the time you place an order until you receive and unpack your new stock, the stock must be ordered at least one month early. You will need to set a higher minimum quantity for such stock items to make sure you have enough to cover for the month while waiting for stock replenishment. Secondly, include safety stock quantity when determining the minimum quantity to trigger reordering is also important. This is to cover for unplanned situations that may occur such as increased consumption.
2. Set Reorder Level and Reorder Quantity
Reorder level is the level of inventory at which a new purchase order should be placed. On the other hand, the reorder quantity is the total number of product units you request from the supplier on an inventory replenishment purchase order. When setting the reorder quantity, we need to clearly know the maximum amount of the stock we expect to hold on hand. After that, we can use the reorder quantity plus safety stock to get the reorder level. While setting the reorder level and quantity for the stock items can make your life much easier, when reordering, you will also need to consider any coming season that may affect your sales. For example, there may most probably be a huge demand on Valentine's Day. Hence, when near the season, you may want to restock more so that you won't miss out on any sales opportunities during the season.
How to check which stock item to restock in TreezSoft?
In TreezSoft, you can easily replenish stock to meet demand and keep costs low for your inventory by referring to our Stock Reorder Advice. Here's a guide on how you can easily get it in TreezSoft.
Step 1: Go to Stock > Reports > Stock Reorder Advice.
Step 2: Enter your criteria (Item Code and Stock Group) and click on the “Retrieve”.
Step 3: After retrieve, it will show all the items that you selected.
The above image shows that the available quantity of item codes of F0001 & S0001 (8 and 12 respectively) is less than the reorder level of 10 and 15.
Therefore, the owner should issue a purchases order to replenish the stock on hand before it runs out. From the above example, the reorder quantity set for each of the items is 5 and 12 respectively.
*Note: If “Available Qty” is more than “Reorder Level”, an item will not appear.
*Note: The Stock Reorder Advice screen only shows a summary, unable to tell coming from which customer.
*For example, Fish & Chips are also under the stock group of Food in this example, but it does not appear in the stock reorder advice.
Why? Available Qty (86) > Reorder Level (50), so this stock item will not be shown in Reorder Advice Report (refer to the image below).
*Note: Both Stock Reorder Advice and stock item details are just displaying stock information and have no checking or processing implications.
By using stock reorder advice, you can keep track of all items to make sure your stock is available at all times and thus avoids any production glitches.
You can visit these links to read more related topics in TreezSoft:
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