![]() We need to look at two separate parameters: In addition, at the end of the article you will find a tool to download for calculating your reorder point.īut first of all, let’s look at the challenges of monitoring your stocks with precision. To make it easier to understand and to assist with your own calculations, we have provided illustrations with each step accompanied by a concrete example. So how should you reorder and manage stock levels? Below you will find the essential steps and formulas for optimising your ordering. Obsolescence for certain product categories (for example foodstuffs) that could lead to stock being thrown away.Reduced margin when selling surplus stock at a reduced price.Increased charges (fixed and variable): renting additional storage space, staff and insurance, among others. ![]() Increased working capital requirement (WCR): additional financing needs.THE CONSEQUENCES OF POOR STOCK MANAGEMENT ![]() In plain terms, it’s what you need to do to ensure that you have enough stock to meet customer demand, but also that this stock isn’t so large that it affects your profitability.Īt the end of this article, you'll be able to download our reorder point calculator.Īn imbalance in one direction or the other is harmful for the company. To have the right level of stocks you need to know how much to order and when to order it, with the aim of finding a balance between low storage costs and being able to meet customer demand. When growth is on the menu, your attention must be focused on stocks. It is crucial to remain vigilant and ensure that you have monitoring indicators in place to support your development. ❗ However, you need to be aware that managing your stock only gets more complicated as you grow, and it shouldn’t be based on approximate forecasts, your intuition or even what you see in a crystal ball! Your small business is on the path to success and you should be delighted. Your business is expanding, your sales are taking off and the forecasts are looking good for the coming months. Learn to master the key indicators for optimal stock replenishment
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