Optimal time to order
The question of when and to what extent goods and merchandise need to be ordered is central to the functioning of a warehouse. Within operational planning, it is not only the order quantity that matters, but also determining the right time to order. But how is an optimal order time defined and how can it be calculated? First of all, it should be emphasized that "optimal" in this context means that goods arrive at the warehouse at the latest when the minimum quantity required for production or delivery is reached or fallen short of.
In short, the optimum order time refers to the moment at which an order must be placed at the latest in order to avoid delays or even production stoppages. However, since different lead or procurement times have to be taken into account depending on suppliers and also articles, the use of a modern merchandise management system is recommended.
Types to determine the optimal time to order
Basically, a distinction is made between quantity-relevant and date-relevant purchase order procedures, i.e. between the reorder point procedure and the reorder cycle procedure.
- Order point procedure
The reorder point method is a principle for determining the optimal ordering time, in which the available stock is targeted. In essence, this means that orders are placed when there are still enough goods in stock to be able to produce or deliver as usual during the procurement period. Always provided that the previously defined safety stock is not touched. On the one hand, this can be done on the basis of fixed order points, such as periodically at certain points in the year - and then without any checks during the year. Here, consistent demand and reliable replenishment times would be important.
On the other hand, there is the floating order point, which always checks automatically after an article has been removed whether limit values have been reached or not. In this way, an order is placed exactly when the need actually arises. In practice, this variant is mainly used to determine the optimal time for ordering.
- Ordering rhythm procedure
In the ordering frequency method, unlike the floating ordering time described above, an order is placed on the basis of fixed intervals. In this case, testing is not carried out after each sampling, but in predefined control cycles (individually specified intervals). It is important to note that the ordering point occurs when the stock is sufficient to ensure that there is enough merchandise during the replenishment period plus the period until the next control cycle date - without touching the safety stock.