Delivrd: Reorder Point vs. Safety Stock

Reorder Point vs. Safety Stock: What’s the Difference?

The concepts of reorder point and safety stock may be confused in Delivrd, so we’d like to explain the difference in this article.

Reorder Point vs. Safety Stock

Imagine that you work for a company that prints on T-shirts, and you have a supplier from which you regularly order “blank” T-shirts of different colors. Black and white medium-sized T-shirts are high sellers, as most people prefer their corporate logos, rock band names, or just funny pictures to be printed on black or white tees.
Let’s take a white medium-sized T-shirt as an example. Let’s suppose that you have 10 boxes of white medium-sized T-shirts in stock, with 100 tees per box, and would like to reorder them from your supplier when you have 5 boxes (500 tees) left. So, how to achieve this during inventory management in Delivrd?

  1. Click Products & Inventory > Products to view a list of your products. To learn how to create and import new product records, see Delivrd User Documentation.
  2. To the left of the needed product name, click Actions > Edit.
  3. On the General tab, in the UOM (Unit of Measure) drop-down list, select Box.
  4. In the Reorder Point field, enter 5.
  5. Click Save.

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As a result, you will get low inventory warnings when your inventory of white medium-sized T-shirts reaches 5 boxes. You can still take the T-shirts from the warehouse, but it’s a bad practice, which may result in reaching the safety stock limit.
Safety stock acts as a safety belt for your inventory. Issuing stock when it goes below safety stock levels is a poor inventory management practice and should be avoided whenever possible.
So, let’s suppose that you want to be alerted when their number reaches 2 boxes (200 T-shirts). In Delivrd, do the following:

  1. Click Products & Inventory > Products to view a list of your products. To learn how to create new products, see Delivrd User Documentation.
  2. To the left of the needed product name, click Actions > Edit.
  3. Click the Logistics tab.
  4. In the Safety Stock field, enter 2.
  5. Click Save.

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As a result, the inventory of white medium-sized T-shirts will no longer be issued when it reaches 2 boxes, and the inventory amounts will be marked with red for all transactions until you make a replenishment order. And, when you reach the reorder point, the inventory amounts will be marked with yellow. Here’s how it looks in Delivrd:

inventory-list-rp

And here’s how it’s reflected in transaction history:

transaction-history-rp

However, it’s up to you decide what to do when you reach the safety stock level. In case of reaching the reorder point, it’s clear that you need to reorder inventory by using the replenishment (purchase) order in Delivrd.

But in case of reaching the safety stock, you can either stop all issues or fulfill customer orders until the stock level is zero. You can use the safety stock only as a measure of accurate inventory management, as the stock should never get below the safety stock level.

An accurate reorder point means that you never get lower than your safety stock level, but a good safety stock level means that your quantity never hits zero while people are still willing to purchase the product.
Note: The figures in the example above are very approximate. Of course, you should make thorough calculations, estimations, and forecasts to determine the exact figures for reorder point and safety stock.

Calculating the Reorder Point

And now let’s involve some math and see how to calculate the reorder point. Please note that it’s possible to make such calculations only when you have a stable sales/purchase cycle. As for the reorder point, it’s calculated for each product individually. So, here’s the reorder point formula:

(Average Daily Unit Issues x Delivery Lead Time) + Safety Stock

where average daily unit sales means the average number of product units that are sold per day, and the average delivery lead time is a time period that is typically required for a specific product to arrive.

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Multi Location Inventory Management in Delivrd, Part 5

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

This is the last part of our multi location inventory management series. We’ve covered initial setup , locations setup and carrying out inventory transactions: with orders or without orders.

This last part will explain Delivrd’s transaction history – a powerful tool to analyze historic inventory transactions for each inventory location.

Inventory Transaction History

Here’s an example of our kitchen buzzer timer’s inventory transactions:

Product Inventory Transactions

Main data fields displayed in the transaction history:

(Transaction) Type – type of inventory transactions. Possible values are: Initial Inventory Count, Inventory Count, Replenishment Order, Customer Order. Each transaction type has a different effect on inventory quantities (explained later)

Order Number – if the transaction was related to an order – either a replenishment (purchase) order or a customer order – the relevant order number is displayed, with a link to the order details.

Location – the inventory location where the transaction was carried out.

Quantity – the transaction’s quantity. for example, the number of pieces that were received from a supplier through an order or were issued from stock.

In an inventory count transaction, the quantity displays the actual quantity that was counted.

Inv. Change – the effect in terms of inventory quantity the transaction had. When inventory is issued (for example, for customer order) inventory is reduced, so the Inv. Change field has a – (minus) sign next to it. When inventory is received, quantity increases.

 In an inventory count transaction, the inventory change displays the difference between the quantity before the count and the quantity after the count. So if inventory quantity was 5 before an inventory count, and it is 8 after the count (because there were physically 8 pieces counted), the inventory change would be 8 – 5 = 3.

Cum Qty (cumulative quantity) – This is the inventory quantity once the transaction has been completed. It describes the actual quantity progress over time.

In the example above, after the product has been created in Delivrd, inventory count was carried out in 3 inventory locations: ‘Default’, ‘North’ and ‘South’. The cumulative quantity (Cum Qty) once the inventory counts were completed is 20, which is the sum of all previous transactions.

Then, various inventory transactions (both issue and receive) were carried out. The cumulative quantity is adjusted according to each transaction type and quantity.

Let’s examine the following transactions (marked with a red rectangle)

Stock Transfer

3 pieces were transferred from ‘North’ inventory location to ‘South’, so two transaction were created – one of them has a negative (marked with a minus) inventory change from North, and a complement positive transaction in the ‘South’ location. The total inventory after this two transactions remained the same (26) because the same quantity was issued and received.

You can also view a chart of a product’s inventory quantity over time (plotted based on the ‘Cum Qty’ field)

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Multi Location Inventory Management in Delivrd, Part 4

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

This is part 4 of our multi location inventory management in Delivrd. Previous parts covered setting up support for multi inventory management in Delivrd, creating inventory locations, inventory records and importing inventory records, and in part 3 , carrying out inventory transactions.

This 4th part will explain how to use multi location inventory management in the context of 2 processes: replenishment order processing and customer order processing.

Replenishment (purchase) order

Once a replenishment (purchase) order has been released, ordered products can be received. When receiving products, you can now specify the inventory location where the product is received.

For example, we’ve create a replenishment order for 50 pieces for one of our products, digital kitchen buzzer timer.

In inventory location North, inventory quantity before receiving is 5:

Inventory before receving

When we receive the 50 pieces, we set the inventory location to North, because that is where we physically receive and store these 50 pieces:

Receive purchase order

Inventory in the North location is now 55:

Inventory afer GR

Customer order

Similar to replenishment order processing, when products are issued to fulfill a customer order, you can select from which inventory location a product is issued.

In the example below, 1 piece of digital kitchen buzzer timer is shipped to a customer from the North inventory location:

Ship to customer

Once the order has been fulfilled, 1 piece will be reduced from the inventory quantity in the North inventory location.twitteryoutube

Multi Location Inventory Management in Delivrd, Part 3

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

This is the third part of our multi location inventory management guide for Delivrd.

So far, we have covered setting up Delivrd to support multi location, and how to create inventory locations, inventory record and inventory records import.

We will now move on to the most interesting part – performing inventory transactions for multiple locations.

Inventory Count

The most basic inventory transaction is an inventory count. When you perform an inventory count, you enter the current quantity of available inventory in a specific location.

An inventory count is useful in several situations:

Initial entry to inventory – when you first start using Delivrd for your inventory management processes, you need to update Delivrd to reflect the actual, physical inventory that exists in your inventory locations. You use the inventory count to perform that.

Inventory update – for many reasons, the inventory quantity managed by Delivrd might not be the same as the actual quantities you have on hand.

A healthy inventory management practice it to initiate an inventory count once every predefined period: daily, weekly,monthly or any other period that suits your business. You use Delivrd’s inventory count to update Delivrd to reflect the most accurate and up to date inventory situation.

Negative inventory – In Delivrd, negative stock is allowed. That means that if you issued more inventory than the inventory quantity that was available, your inventory will become negative. Obviously, negative stock means Delivrd no longer reflects your actual inventory quantity.

As soon as you inventory quantity becomes negative, you should count your physical inventory and update Delivrd accordingly.

You can perform an inventory count for a single product or choose to count some or all of your products, it’s up to you.

To perform an inventory count, select the inventory record you want to update, and from the Actions menu, select ‘Count’

Then, update the quantity that actually exists for this product in the specific location.

For example, current inventory quantity of our digital kitchen buzzer timer in our Default location is 14 pieces:

count_product

In Delivrd, current inventory quantity is 21, which is not correct.

Current inventory

We perform an inventory count for the timer’s inventory record in the Default location and enter 14.

Inventory count

Now, inventory quantity in Delivrd is in sync with the actual quantity on hand.

Updated inventory

 

 

Issue/Receive inventory

You can use this inventory transaction to receive inventory (for example, from a supplier or product returns) or to issue inventory – issue to scrap, to customer order or any other issue scenario.

To issue/Receive inventory , select the relevant inventory record, and click on the ‘Actions’ button and select Issue/Receive.

In the following screen, select whether you want to issue or receive inventory, enter the transaction quantity and optionally – a remark to describe the transaction.

To continue the example above, we have 14 pieces of the product digital kitchen buzzer timer in the Default location. We will now issue 3 pieces from that location to an order:

Issue inventory to customer order

Once the transaction has been saved, remaining inventory quantity is 11:

Inventory after issue

When you receive inventory, inventory levels are increased by the quantity receive. When you issue inventory, inventory levels are decreased.

 

Location Transfer

This inventory transaction allows you to transfer a product’s inventory between two locations – one location is the issuing location and the other – a receiving location.

To perform a location transfer, select the inventory record of the issuing location, click on Actions and select ‘Location Transfer’, select the location where the products will be received and the quantity to be transferred.

For example, our digital kitchen buzzer timer has 11 pieces available in the Default location, and no inventory in the North location:

Available Multi Locations

We transfer 5 pieces from Default to North:

Inventory transfer

Once the transaction has been completed, Default location has (11-5=) 6 pieces and North location has (0+5=) 5 pieces

Transfer inventory

Before you can transfer a product to an inventory location, you must create an inventory record for that product-location combination. That is explained in part 2 of the multi location inventory management series.

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Multi Location Inventory Management in Delivrd, Part 2

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

In part 1 of our multi location inventory management series we explained how to activate the relevant settings in Delivrd to enable inventory management in multiple locations (e.g., multiple warehouses).

The following guide will walk you through the steps required to start managing your inventory in multiple locations in Delivrd.

Create inventory locations

The first step is set up your different inventory locations. To do that, from the Inventory list page, click on the Actions green button and select ‘Maintain Locations’.

Maintain inventory locations

A list of all existing inventory locations will appear. You can add, edit or delete inventory locations.

You cannot delete an inventory location which has products with inventory. You need to make sure all products has 0 (zero) stock in an inventory location before deleting it.

When you first registered to Delivrd, an inventory location named ‘Default’ was created automatically and all your inventory was managed through it. You can change its name but you cannot delete it.

Create Inventory Records

An inventory record represents a combination of a product and specific inventory locations. A single product can exist in many inventory locations, and an inventory location can have as many products as you wish.

To create an inventory record, click on ‘Add Inventory Record’ link from the inventory list ‘Actions’ menu. You then have to input the following information:

Product – select the product for which this inventory record is created.

Location – select the inventory location where this product is to be stored and managed.

Available Quantity – enter the quantity of inventory for this product in the specified inventory location. If you do not have any inventory stored in the inventory location, you can still create the inventory record with zero (0) stock.

Damaged Quantity – enter the quantity of your damaged inventory for this product in the specified inventory location.

Remarks – enter any relevant remarks.

Add Inventory Location

 

In order to create an inventory transaction for a product in a specific location (for example, receive to inventory, count inventory or transfer inventory between locations), you must first create an inventory record. For example, if you want to transfer inventory for product A from location North to location South, you must first create an inventory record for both locations for this product. Otherwise, you will not be able to perform the transfer.

You can view an inventory record as a means to allow or block a specific product from an being managed in an inventory location. If you did not create an inventory record for a specific product in a specific inventory location, that product cannot be managed in that location.

Import Inventory Data

If you manage many products across several inventory locations, maintaining inventory records can be time consuming.

In Delivrd, you can import your inventory data from a simple text file. The inventory data file has a very simple structure: it contains a line number, the product’s SKU, the inventory location name and the inventory quantity. The file also contains a header line.

A sample inventory file might be as follows:

0,SKU,LOCATION,QUANTITY
1,10000300,Default,100
2,10000311,Default,150
3,10000311,North,0
4,10000312,North,132

Line 0 is the header line and must exist exactly as specified in the examples.

Lines 1-4 are inventory records. In this example, we have 2 inventory locations: Default and North (remember that the ‘Default’ inventory location is created automatically for each product in Delivered).

Line 1: Sets inventory quantity for  SKU 10000300 to 100 in the Default location

Line 2: Sets inventory quantity for SKU 10000311 to 150 in the Default location

Line 3: Creates an inventory record for product SKU 10000311 in the ‘North‘ location. Inventory quantity is 0, meaning no actual stock of this product exist yet in the ‘North‘ location. By creating this inventory record we enable this product for the ‘North‘ location, and we can now count the product or transfer inventory from ‘Default‘ location to ‘North‘ location.

Line 4: Sets inventory quantity for SKU 10000312 to 132 in the Default location

Here’s how inventory list looks like after the inventory records were created using the sample import file above:

Inventory list sample

 

Once you complete your inventory data setup as explained in this step, you can move to the next step: inventory transactions in multiple locations. You will learn how to count, issue,receive and transfer inventory in a multi location environment.twitteryoutube

Multi Location Inventory Management in Delivrd, Part 1

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

One of the most requested features to be added to Delivrd is now available – multi location inventory management.

An inventory location describes a place where inventory is physically stored and managed (received, counted, issues, sold, scrapped etc.). For larger operations, an inventory location can be a warehouse or a distribution center. For smaller operations, an inventory location can be a room or even a shelf.

You can also choose create 2 or more inventory locations to describe a single physical location – perhaps because of different storage conditions, the type of products stored in each location, etc.

Setting up multi inventory locations

By default, all registered Delivrd users are assigned to their own Default inventory location. Since many users do not need support for multi locations and in order to keep Delivrd as simple as possible, this default location is hidden, and all inventory transactions are assigned to this location.

If you want to manage your inventory at multiple locations, you need to activate this feature.

Activating multi location inventory management

Go to your settings (at the top-right hand part of each page).

Delivrd Settings

Check the ‘Multiple inventory locations?’ check box. Once checked, multi location inventory is enabled.

check_multi_inv

When you go to the Inventory list page, new options are now available, and each inventory record is displayed with its relevant location:

Delivrd multi inventory locations

 

New options available for multi location inventory management:

Add location – use this option to create new inventory locations.

Add inventory record – use this option to create an inventory record for a specific product in a specific inventory location.

Import inventory data – use this option to import your inventory data from a text file.

As explained before, a Default location is created and assigned automatically to any product you create, so all your current inventory records have the Default location assigned.

In the next part, we will explain how to create or update existing inventory locations, how to maintain inventory records, and how to import inventory data to easily update Delivrd’s inventory levels.

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Basic Inventory Management with Delivrd

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

Many of our Beta users are looking for a very simple inventory management solution, which will allow them to build a basic product catalog, updated initial inventory levels for each product, and then keep inventory levels updated – either by receiving products to inventory (for example, from suppliers) or issuing products from inventory (for example, for customer orders).

Delivrd now supports this simple inventory management scenario with the addition of stock receiving and issuing. Delivrd already support receiving products to inventory with a replenishment (purchase) order, and issuing inventory to customer orders, but now, if you look to receive or issue stock without having to create orders, there’s a simple way to do that in Delivrd.

Basic inventory management process

1. Create your products – You can either create products manually or import them from a csv file.

2. Update initial stock quantities – you do this by using the ‘Count’ action from the inventory page. This should be done immediately after a product has been created.

3. Update inventory quantities to reflect inventory movements – you use inventory ‘Receive/Issue’ transactions to reflect actual inventory movements.For example, if you receive 5 pieces of a product from a supplier, you should select the ‘Receive to Inventory’ transaction. If you sold 3 pieces, you should use the ‘Issue from Inventory’ transaction.

4. To view all of your inventory movements, you can use a product’s transaction history.

Video tutorial – basic inventory management in Delivrd

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Customized Categories in Delivrd

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

In order to make Delivrd the best inventory management and order fulfillment software, we drive our product development from our user’s feedback. And your voice was clear: you need the ability to create your own product categories. And now it’s here!

Product Categories:

To create product categories, go to the ‘Products’ page, and from the Actions menu, select ‘Maintain Categories’:

maintain categories

From here, add, edit or delete the categories according to your requirements:

new product category button

New product category name

Once you create categories, you can assign them to products – either by updating existing products or when creating new ones:

Categorize Products

You can also search for products by category from the Products page:

Search product by category

 

We look forward to getting more feedback from you. Vote in our polls (look at the right bar of this page), or use the Feedback page (again, look right for the green button or click here) to let us know what we should improve in Delivrd.twitteryoutube

Replacing Excel Inventory Management with Delivrd

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

Delivrd is a flexible inventory management and order fulfillment solution, as it can support several use cases – from basic inventory management, to complex eCommerce order fulfillment processes, with support for serial numbers, profit and loss analysis, through usage of barcode technologies.

In its most basic form, Delivrd can be a great replacement for your current Excel inventory management solution.

The advantages Delivrd has over Excel inventory management are clear:

1. Delivrd is free! there are no limits on how you use Delivrd, and it costs you nothing.

2. Delivrd is on the cloud – you can access it from anywhere, anytime. You do not risk having copies of copies of copies of Excel spreadsheets you opened on different computers, making it impossible to know your real inventory situation.

3. You can scale – you can easily start using Delivrd’s for very basic inventory management . Once you are comfortable with Delivrd and have everything up and runing, you can grow with Delvird’s other powerful features – purchase and sales order management, bar code scanning for enhanced accuracy, serial number management, packaging material management, powerful pick-pack-ship, profit and loss analysis and many more features.

Using Delivrd to replace Excel for inventory management

1. Register to Delivrd – it’s free! (we are in Beta)

Delivrd_register

2. Once logged in, either create your products manually, or use our basic products import tool to import all of your products.

3. Use the inventory count feature to update the inventory levels of the different products. You can add a comment to each count that will describe what caused the inventory count to take place

Screenshot – to count a product, go to the Inventory page, click on ‘Actions’ and select ‘count’ from drop down list.

Count product

In the example below, we perform 2 counts – an initial inventory count to update current inventory situation (15 pieces in this case)

Initial inventory count

We later sell 2 pieces, so we update inventory to 13, and add a remark about the sale we made.

Selling 2 pieces

You can Delivrd’s transaction history to see the inventory situation over time, including the comments entered for each inventory count.

Inventory vector

Your inventory is now managed in Delivrd, and every time products are received (from a supplier, or from a certain warehouse) or issued (sold, or just issued to any other purpose), you can use Delivrd’s inventory count feature to update your inventory levels for simple, accurate inventory management.

You can continue using Delivrd for basic inventory management just as explained here. If you need more robust inventory management process, you can implement replenishment orders for receiving products to stock, and use customer orders to manage stock issuing.

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Importing Products Into Delivrd – The Simple Way

Note: For up-to-date guides on using Delivrd, please refer to official Delivrd documentation.

We want to make Delivrd as simple to use as possible for those looking for a basic inventory management solution, so we have simplified the way products are imported into Delivrd.

If you need to, you can still import extended product data. But if you want to start easy and simple, with the minimal product data required by Delivrd, you can upload a basic products file with a minimal set of data fields:

1. Name – product name, up to 30 characters

2. Long Description – Product long description, up to 255 characters

3. Product Category – Select the proper category from the category list (you can view the list in the Products List page

4. SKU – That needs to be a unique number identifying the product

5. Value – The value of a product. This can be the purchase price, the sales price, an estimated value.

6. ImageURL – A URL of an image of the product. We believe that having an image of a product throughout the different process will improve overall inventory accuracy.

Each line should begin with a line number, first line – line number 0 , then 1, then 2 etc. See the samples below.

For Delivrd to understand you are uploading a basic products file as described in this guide (as opposed to the larger product data file), the file must be named: productinv.csv

Here’s a sample of how a few lines of the file might look like:

0,Name,Description,Group,SKU,Value,ImageURL
1,”Digital LCD Kitchen Buzzer”,”Ultrathin Credit Card Sized Digital LCD Kitchen Buzzer Timer with Magnetic Mount”,”Business & Industrial”,1831114,5,http://img.dxcdn.com/productimages/sku_19048_1_small.jpg
2,”Desktop Thermometer”,”A2260 Desktop Thermometer Hygrometulticolored”,”Business & Industrial”,3ds111f8,10,http://img.dxcdn.com/productimages/sku_296738_1_small.jpg
3,”Triathlon cycling shoes”,”Shimano SHR60 tri shoes white size 43″,Sporting Goods,43111sdf30,2,http://a2.zassets.com/images/z/2/1/3/6/0/4/2136046-p-MULTIVIEW.jpg

Download Product Data File Sample

Video Tutorial – Importing Basic Product Data To Delivrd

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