Monthly routine
Stock reviews fail when they turn into a data project. This routine is deliberately short enough to run every month.
- Pull data: units sold per week for the last 12 months, by item, and the actual lead times of the last few deliveries.
- Pick items: start with the top items by volume and by value.
- Compute: use the simple rule below.
- Compare: stock on hand and on order against the target.
- Flag: mark items below the target, above twice the target and items with no sales in months.
- Act: order, hold or run a promotion, and note the reason.
- Record: keep the review in a log so that changes can be traced.
A simple rule with invented numbers
One common simple approach is: safety stock = extra weeks of cover chosen for the item’s risk, times average weekly demand. Suppose, as an invented example, an item sells 20 units a week, the lead time is 6 weeks and you choose 3 weeks of safety cover.
| Item (invented) | Value |
|---|---|
| Average weekly demand | 20 units |
| Lead time | 6 weeks |
| Demand during lead time | 120 units |
| Safety cover chosen | 3 weeks = 60 units |
| Reorder point | 180 units |
If stock on hand plus on order is below 180, order. These numbers are invented to show the arithmetic.
Choosing the cover
Cover is a judgement per item, not a single number for the whole catalogue.
- More weeks for items with long or uncertain lead times, or with a big effect on customers if out of stock.
- Fewer for slow movers and items with short lead times.
- Adjust before the season, when demand tends to rise for winter items; use your own sales history to see by how much.
Checks
Three numbers decide whether the safety stock is doing its job.
- Use real lead times, including delays, not the quoted ones. The quoted time is the best case, and stock has to cover the normal case.
- Look at stock-outs. A stock-out means the cover was too low, whatever the spreadsheet assumed.
- Look at slow stock. Stock left after the season is cash that will not move until next winter.
Limits
This is a simple method with invented numbers. Distributors with complex ranges may use statistical methods; use what suits your data.
Boundary: All figures are invented to show the arithmetic and no market forecast is made; use your own demand and lead-time data.
Further reading on this site.
Wholesale Snow Plow Blade Programmes for Distributors: Designing the Terms ↗Wholesale Carbide Ice Grips: Building a Distributor Programme ↗Wholesale snow plow blades for distributors ↗Imported vs Domestic Steel Edges After Metals Tariffs: How to Compare Fairly ↗Answering a Supplier Price-Change Notice: A Response Checklist and Reply Template ↗Keeping Import Files Audit-Ready: A Monthly Housekeeping Routine for Wear-Parts Importers ↗
