What is a re-order level?
In a nutshell, a re-order level is the point at which a business can order new stock from their supplier or manufacturer.
In most cases, each SKU will have a specific re-order point, which occurs when the amount of a specific SKU falls to a pre-determined level.
Homeware; Exploring the growing market…
What is a re-order level?
In a nutshell, a re-order level is the point at which a business can order new stock from their supplier or manufacturer.
In most cases, each SKU will have a specific re-order point, which occurs when the amount of a specific SKU falls to a pre-determined level.
Homeware; Exploring the growing market…
What is the purpose of a re-order formula?
Holding the right or optimal amount of stock in storage at any given time is more difficult and not as simple as it sounds. There needs to be a good balance between being able to meet their customer demand while also avoiding unnecessary storage costs as a result of overstocking.
So, the purpose of a re-order level is to ensure that the risk of an item going out of stock is minimised. If you do run out of stock you may have to place orders on back-order, which can have a negative impact on your overall business, costs, and customer satisfaction.
In theory, a re-order level will prevent items from going out of stock should you receive a sudden surge in demand, delays from your supplier/manufacturer, a bulk order, etc. Calculating your re-order level can be calculated using what is known as the Re-order Point Formula.
Homeware; Exploring the growing market…
What is the re-order point formula?
The re-order point formula is quite simple, and is as follows;
Re-order point = total lead time demand + safety stock.
In order to successfully use this formula, you need to understand how to calculate your lead time demand and safety stock levels. Lets explore how you calculate the total lead time demand.
ROP in practice
Lets explore a couple of examples where ROP is used to calculate re-order levels.
What is the purpose of a re-order formula?
Holding the right or optimal amount of stock in storage at any given time is more difficult and not as simple as it sounds. There needs to be a good balance between being able to meet their customer demand while also avoiding unnecessary storage costs as a result of overstocking.
So, the purpose of a re-order level is to ensure that the risk of an item going out of stock is minimised. If you do run out of stock you may have to place orders on back-order, which can have a negative impact on your overall business, costs, and customer satisfaction.
In theory, a re-order level will prevent items from going out of stock should you receive a sudden surge in demand, delays from your supplier/manufacturer, a bulk order, etc. Calculating your re-order level can be calculated using what is known as the Re-order Point Formula.
What is Kitting and Assembly?
Kitting and assembly is a fulfilment service that is offered by most 3PL companies. It is a process that involves compiling, or assembling different parts and components together to create one final product, bundle, or kit. It is worth noting that this then becomes one singular SKU rather than multiple.
Kitting and assembly gives you the chance to offer customised bundles, kits, and products, meaning that you can drive more sales through discounts, promotions, etc.
What is the re-order point formula? (ROP)
The re-order point formula is quite simple, and is as follows;
Re-order point = total lead time demand + safety stock.
In order to successfully use this formula, you need to understand how to calculate your lead time demand and safety stock levels. Lets explore how you calculate the total lead time demand.
ROP in practice…
Lets explore a couple of examples where ROP is used to calculate re-order levels.
How to calculate total lead time demand…
Your lead time is the amount of days it takes for you to receive a certain product from the time you initially placed the order. So, to calculate your lead time demand, you can just multiple your average daily sales volume for that particular SKU.
Total lead time demand + lead time in days x average daily sales.
What is Kitting and Assembly?
Kitting and assembly is a fulfilment service that is offered by most 3PL companies. It is a process that involves compiling, or assembling different parts and components together to create one final product, bundle, or kit. It is worth noting that this then becomes one singular SKU rather than multiple.
Kitting and assembly gives you the chance to offer customised bundles, kits, and products, meaning that you can drive more sales through discounts, promotions, etc.
The Benefits of Calculating Your Re-order Level…
When it comes to ROP and using this method to calculate re-order levels, there are plenty of benefits. Lets explore how ROP can be beneficial for your eCommerce business…
The Benefits of Calculating Your Re-order Level…
When it comes to ROP and using this method to calculate re-order levels, there are plenty of benefits. Lets explore how ROP can be beneficial for your eCommerce business…
Exploring factors that can affect your re-order point calculation…
Exploring factors that can affect your re-order point calculation…
Improve your inventory management with TSP…
At TSP Fulfilment, we are an award winning 3PL company with over 20 years of industry experience, specialising in B2B and Amazon Fulfilment, as well as B2C Fulfilment.
We use industry leading technology to help you accurately track your inventory levels, allowing you to make informed decisions regarding your business. Explore our full range of services below…
Homeware; Exploring the growing market…
Improve your inventory management with TSP…
At TSP, we are an award winning 3PL company with over 20 years of industry experience, specialising in B2B and Amazon Fulfilment, as well as B2C Fulfilment.
We use industry leading technology to help you accurately track your inventory levels, allowing you to make informed decisions regarding your business. Explore our full range of services below…
Our Range of Fulfilment Services
Our Range of Fulfilment Services
Collate your product details and connect your stores / market places
Link you into our preferred courier network
Take delivery of your stock, go live!
Collate your product details and connect your stores & marketplaces.
Link you into our preferred courier network.
Take delivery of your stock, go live!