How to manage Restocking Metrics in the Restocking Metrics Worksheet

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Restocking Metrics Worksheet page

What are the Restocking Metrics

In general, there are some metrics that many businesses use to manage their warehouse. Those metrics will indicate them:

• What products to restock?

• When should we restock those products?

• How many qty to restock for those products?

For each product, there will be metrics:

• Lead Time

  • The number of days it takes for products to come since the Purchase Orders is sent to the supplier.

• Daily Sales

  • The quantities of product is sold per day on average. (calculated by the total sold qty during the selected period / total days in the period).

• Safety Stock Level

  • The stock level we should keep on hand to prevent out of stock from demand surge or delay purchase order.
    Auto-Calculate Formula: Safety Stock (Level) = Safety Stock (Days) * Daily Sales.

• Reorder Point

  • A metric that refers to the level of inventory at which a warehouse should place a new order to ensure that it has enough inventory on hand to meet demand without running out of stock.
    Auto-Calculate Formula: Reorder Point = Safety Stock (Level) + Daily Sales * Lead Time.

• Preferred Stock Level

  • The stock level that you want to reach after making an order to restock.
    Auto-Calculate Formula: Preferred Stock (Level) = Preferred Stock (Days) * Daily Sales.

How do we manage stock with Restocking Metrics

Reorder Point = Safety Stock (Level) + Daily Speed * Lead Time. This means that at the time the stock level of the product reach Reorder Point, the Purchase Manager should start making order to restock for the product, or the stock level will fall below Safety Stock (Level).

For example, Reorder Point = 100 = 20 + 20 * 4. It means that the Safety Stock Level = 20; Daily Sales = 20; Leadtime = 4. It will takes 4 days for the stock to arrive from the supplier, and during that 4 days, 20 * 4 = 80 quantities will be sold. Therefore by the time the PO arrive, the stock level will be 20 equal to the Safety Stock Level.

However, things may not always the same. The POs may be delayed to 5 days, or in the 4th day the sales is 30 in stead of 20 in average. If we don’t have 20 quantities of Safety Stock Level, we would be run out of stock to sell before the PO arrives.

When the Purchase Manager make the PO for the product when its stock level reach Reorder Point, it is the Preferred Stock Level will help him determine how much quantities of product to order.

Suggest Purchase Qty = Preferred Stock Level - Available Qty - Qty from Internal Transfer (config) + Backordered Qty (config) - Qty on PO (config).

Qty from Internal Transfer: The quantities of product that is being transferred from other sources to current source but haven’t been received. There will be a configuration to use it in the calculation or not.

Qty on PO: The quantities of product that has been ordered from the Supplier but haven’t been received. There will be a configuration to use it in the calculation or not.

Qty Backordered: The quantities of product has been backordered (insufficient to fulfill for orders). There will be a configuration to use it in the calculation or not.

How do we manage Restocking Metrics

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You can set up the Restocking Metrics

To manage the restocking metrics, you can access the Restocking Metrics Worksheet page by Menu → Purchase Management → Restocking Metrics Worksheet.

In the page, you can manage the restocking metrics by 3 ways:

• You can edit manually by filling in the Safety Stock Level, Reorder Point, Preferred Stock Level for the product then click on Save button.

• You can also import the restocking metrics for many product at once by importing CSV file.

• The RMS system also provide the auto-calculate function. You will need to select the product, fill in its Lead Time, Safety Stock (Days), Preferred Stock (Days) then click on Auto Calculate button. The Restocking Metrics will be automatically calculated as the formula below:

  • Safety Stock Level
    Auto-Calculate Formula: Safety Stock (Level) = Safety Stock (Days) * Sales Speed.

  • Reorder Point
    Auto-Calculate Formula: Reorder Point = Safety Stock (Level) + Sales Speed * Lead Time.

  • Preferred Stock Level
    Auto-Calculate Formula: Preferred Stock (Level) = Preferred Stock (Days) * Sales Speed.

Sales Speed = Total Shipped Product during Sales Period of Current Source/ Totals Day during Sales Period. (i.e. From 22nd December to 24th December, 20 product was sold and shipped -> Sales Speed = 20 qty / 3 days)

You can change the selected Sales Period to get the most suitable Sales Speed.

You can also print and export the list in the page to process data.