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When To Place An Order

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It is usually a pretty rare occurrence that you are able to place an order for raw materials or products for the precise quantity that you need for a customer order.  More likely, you order products in greater volume than you need, which can be advantageous if you get a price break and if you know you can use it for a future customer order.  Add the variable of time to that equation – ordering early could lead to price breaks, plus the wiggle room you may need for a manufacturing or assembly process.  How do you know when to place an order and the quantities to secure in order to optimize your profit margin and comply with inventory goals?

Before you even consider ordering inventory, you need to know what you have on hand.  The last thing you need is to order more of the same materials you already have sitting on the shelves at one warehouse or another.  You also need to know what your customers are buying, in what quantities, and when.  You can’t trust spreadsheets for this type of information, which is why many businesses use an enterprise resource planning (ERP) solution

Once you have control and insight over inventory, you can make appropriate stocking decisions that support your strategic goals.  Forecasting features, such as the Demand Manager offered by RockySoft, can provide guidance with analyzing and using inventory data to make smart, profitable decisions such as what inventory to order and when.  You can identify trends with product sales or customer buying habits with a robust ERP solution combined with forecasting functionality.  Identify which products are selling the most (and the least) by customer, region, or other qualifiers.  Then you can choose a component, product, customer, or business region, and forecast replenishment inventory to meet a specific strategic goal – such as buying inventory at a time or in a quantity that protects or improves profit margins. 

Timing can be everything. When you place an inventory order can be as important as the quantities you buy and from which supplier.  Get greater insight into your supply chain and inventory by using the right technology.  Contact RockySoft for more information about optimizing inventory replenishment and getting the timing right with a business solution that offers greater inventory control and forecasting functionality.

By Jeffrey Porter with RockySoft, Microsoft Dynamics software provider for demand planning

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