Setting Reorder Points So You Never Run Out Mid-Job

Why this matters

A stockout almost never happens at a convenient moment. It happens with a tech at a customer's door and the last one of something already used yesterday, on a job nobody logged. The fix is not to carry more of everything. It is to set a reorder point for each part that is a number, not a feeling, so replenishment triggers while you still have enough on hand to cover the jobs that land before the restock arrives. Get the number right and "we are out" stops being a surprise.

The reorder point is a countdown, not a floor

A reorder point is the on-hand quantity that triggers a reorder. The trap is thinking of it as "how few I am comfortable with." It is really a countdown: it must cover everything you will use between the moment you reorder and the moment the new stock lands. That gap is the lead time, and it is the whole ballgame.

Reorder point = the amount you expect to use during the lead time, plus a safety buffer for the days that run hot.

If a part takes a few days to restock and you use a couple a day, you will burn through several before the order arrives. Set the trigger below that and you are out before the truck comes back. This is why "reorder at two" fails: it ignores how fast two disappears and how long the refill takes.

Size it from your own usage

You do not need a forecast model. You need your own history.

• Find your typical usage rate. Over a representative stretch, how many of this part do you use in a week? Your parts-usage records hold this if usage is logged at the job.
• Find your lead time. From placing the order to stock on the shelf, how long, honestly, including the slow supplier and the backorder that happens sometimes.
• Multiply. Usage rate times lead time is your baseline reorder point, the amount you will consume while waiting.

Do this for the parts that hurt when they run out first. You do not need a number for every washer. You need one for every part whose absence stalls a job.

Safety stock covers the bad week, sized to the pain

Average usage is a lie on your worst day. Some weeks run double. Some supplier deliveries slip. Safety stock is the cushion that covers that variation, and you size it to two things: how much the demand and lead time swing, and how badly a stockout hurts.

• High-criticality, unpredictable parts get a fat cushion. If running out means a return trip and an angry customer, carry enough to ride out a hot week and a late delivery. The cost of the cushion is small next to the cost of the stockout.
• Low-criticality, steady parts get a thin one. A part you can grab on a routine shop stop, with predictable use, needs almost no buffer.
• Longer and less reliable lead times demand more cushion, because there is more time for demand to surprise you before the refill lands.

The cushion is insurance. You pay a little frozen cash and a little space to avoid the expensive event. Match the premium to the risk.

Min-max, so a trigger becomes an order

The reorder point is your min: hit it, and you reorder. The max is how high you refill, set by how much you use between orders plus the safety stock. The gap between min and max is your order quantity. A wide gap means fewer, larger orders and more cash on the shelf. A narrow gap means frequent small orders and more running around. Set the spread to how often you can stand to reorder, then let the min and max run the decision so nobody has to eyeball it.

Revisit the numbers, do not set and forget

A reorder point is right for a season, not forever.

• Reweight for seasonality. Peak-season usage rates are not off-season rates. A number set in the busy months will overstock you in the slow ones, and the reverse leaves you short.
• Chase every stockout back to its number. A part that ran out is a reorder point set too low, a safety stock too thin, or a lead time you underestimated. Fix the number, do not just refill.
• Prune the ones set too high. A part whose max you never approach is frozen cash. Pull the numbers down until they breathe.

The two failure modes point opposite ways: set the point too low and you get stockouts mid-job; set it too high and you get dead cash on the shelf. The number that never runs you out and never buries you in slow stock is the one you tune toward, using your own stockouts and your own dead stock as the feedback.

References

• See related: The Truck-Restock Rhythm, Truck Stock + Parts Inventory Management
• See related: The Dead Stock That's Quietly Costing You
• U.S. Small Business Administration (SBA), inventory control and reorder-point guidance
• Trade-standard practice for min-max replenishment and safety-stock sizing