How To Configure Reorder Points
Purchasing is one of the most critical and challenging tasks in any retail organization. You want to make customers happy by stocking the products that match their demand while also meeting your company’s financial targets.
Finale’s reorder system aims to alleviate some of this stress by providing an automated approach to your reordering. Finale sends reorder alerts and summary emails to help prompt users to engage with the reorder system, which uses one of Finale’s location-based reordering methods (manual thresholds or sales velocity) to populate an accurate suggested reorder quantity directly to your purchase order.
Please keep in mind that Finale implements a location-based reorder system. In simplistic terms, Finale will provide reorder suggestions for a product at each location defined in your account. For example, Finale may suggest that you order 100 apples for Warehouse 1 and 50 apples for Warehouse 2. Finale does NOT combine locations to offer a global reorder approach, suggesting that you order 150 apples total.
If you require a global reorder approach then this article isn’t relevant to you. The workaround would be taking advantage of Finale’s report engine to help export the necessary data fields to accommodate your needs.
As stated above, Finale offers location-based reordering using two different approaches:
- Manual Thresholds
- Sales Velocity
This article will define each reorder method and how to assign default reorder values. In addition, the article will cover how to setup your reorder alerts and summary emails and provide an overview of the reorder screen.
The manual reorder system is a great option for products that may not hold regular sales data.
The standard reorder point field options at the top designate the same values for each location, making it a standard value across the board unless the user enters any location-specific reorder values. Most users elect to enter values for the location-specific options.
The reorder point is the inventory threshold value that will determine when your reorder alert is triggered, adding this product to your reorder screen with a suggested reorder quantity.
The reorder point max is essentially the order-to amount. Finale subtracts your available units from this max field to assign the reorder suggestion quantity.
For example, if the user had 4 available units using the data from the image above, that would trigger the reorder alert for this product since it is less than the 5 unit threshold. Finale would suggest that you order 16 units of this product, taking 20 (reorder point max) - 4 (available units).
Lastly, the reorder in qty of field allows the user to specify if their supplier requires you to order in a specific quantity interval. Referencing the same example above, the suggested order quantity of 16 units would be rounded up to 21, the next divisible number by the reorder in qty of field.
This reorder suggestion would populate to the reorder screen, allowing the user the ability to interact and create a purchase order with the suggested quantity.
The sales velocity option is Finale’s dynamic reorder method, taking the guesswork and endless spreadsheets out of the equation.
Unlike the manual reorder method, Finale calculates your reorder point calc and reorder point max using your sales velocity and leveraging other reorder inputs - supplier lead time, desired safety stock, and expected sales growth — to make smarter, faster, purchasing decisions.
Referencing the image above, here is a breakdown to define each field:
- Calculation method time period (days): Number of days in the past Finale uses to calculate the daily sales average.
- Consumption Velocity (sales velocity): Based on the calculation method time period, this is the average daily sales for the product at this location.
- Processing Days: This defines how long it takes your team to receive inventory after it arrives from your supplier.
- Supplier Lead Days: This is derived from the section immediately above Reordering (the Purchasing section) on the product detail screen and is pulled from Supplier 1 Lead Days. This is the number of days from creating a PO until the shipment is delivered to you from the supplier.
- Safety Stock Days: This adds a pad to the minimum quantity on hand. If you do not want to wait until the very last minute to reorder inventory, add a value here to add additional days of inventory to the minimum quantity. This is a great option for your high volume items.
- Usage Growth % per year: Enter the anticipated yearly product growth here.
- Days of Inventory: How many days of sales you'd like to forecast for when you're ordering. For a month's supply, for example, you would enter "30" for 30 days.
- Reorder Point Calculated: This is the quantity Finale calculates based on all of the fields input. This is the minimum stock level allowed. Once you fall below this number, the product will be included in the reorder report and reorder screen as needing to be replenished.
- Reorder Point Max Calculated: Based on the days of inventory set, this is your ideal stock level to cover the specified number of days.
- Reorder in Quantity Of: Use this field to specify any pack sizes. For example, if your supplier only ships you cases of 12, you would use "12" in this field. Finale would then ALWAYS round up into a multiple of 12, so you can order full packs from the supplier.
The same rules as used in the manual reorder method apply here as Finale uses the reorder point calc, reorder point max, and reorder in qty of fields to provide a recorder suggestion. The only difference is that the reorder point calc and reorder point max are calculated with this approach versus the user being able to assign those values manually.
How to Import Reorder Point Values in Bulk
As previously shared in the import product resource, the reorder values on this screen can be updated in bulk using a product spreadsheet import. After navigating to your product import screen you will see all the supported column titles available under the paste box, just look for your location-based reorder fields.
Configure Default Reorder Values
The hidden step in this process is to configure your application settings to align with your default values and preferences. You can find these settings by navigating to the product tab of your application settings and then scrolling about half way down the page. Please see the screenshot provided below.
Regardless, if you elect to use a standard reorder configuration or per-location approach, Finale calculates all reorder points by location. These checkboxes simply bring the options to your product detail page. Most users have both of these boxes checked, similar to the image above.
The default entries below the checkboxes allow the user to identify their global reorder options and values. This is where you can select the manual method or sales velocity method as your primary method for every product, and you can enter your default calculation method time and default days of inventory.
All of these default values will be used on the reorder page unless the user manually adds a value on the product level, thus overwriting the default value.
Establish Reorder Alerts & Summary Emails
The reorder alert and summary options are configured by each user in the account.
The reorder alert only has two options: run continuously or disable the running. If you have this turned on, Finale will send an alert every time a product hits its reorder point threshold. As it sounds, this can be a lot of emails depending on the size of your product catalog.
The reorder summary is sent once per day, providing the user with a complete summary of every product that needs to be reordered at that time. This is the more popular email notification option.
Please note that you can specify locations for each option. This is useful if you have different warehouse managers managing separate locations.
Regardless of the alert and summary emails, the only way to interact with these alerts and reorder suggestions is to use the reorder screen to help you generate purchase orders.
Using Reorder Screen
The reorder screen is where the magic happens: creating purchase orders from your reorder suggestions based on a specific location and/or supplier.
As you can see in the image above, the pink stool product that has been referenced throughout this article has populated to the screen. There are only 3 available units currently at the East Coast Warehouse, resulting in a reorder variance of -2 units when compared to the reorder point of 5 units.
Then, based on the reorder point max value of 20 units and a reorder in qty of value of 7, Finale has provided the suggested quantity to order: 21 units.
In addition, the location and supplier filters at the top are extremely useful, allowing the user the ability to filter their reorder suggestions. For example, if you had multiple products listed on the screen, some specific to one supplier and others specific to another supplier, you could use the supplier filter to view only one set of products.
As you select your location and supplier filters you will notice that it impacts the number of purchase orders to be created according to the text in the blue button.
Once you are happy with the products on the screen, filtered or not, you can select your create-purchase-order button. This will generate purchase order(s) in a draft status specific to your locations and suppliers attached to the products on the screen. These purchase orders are not committed at this point. They are still editable, draft orders that you can make changes to prior to committing them to your suppliers/vendors.
Please keep in mind that Finale is using your current available units (quantity on hand units - sales reservations + on-order units) at that particular location for the stock value. Once you create and commit a purchase order, those on-order units will be included in your available, removing the product from the reorder screen.