This article will give a general overview of how orders are generated according to the selected ordering method

Replacement Ordering

Sales Replacement Ordering is used for suppliers whose individual goods do not sell in large quantities and to whom orders are sent on a pretty frequent basis.

A Sales Replacement Order works as follows: As products are sold they are placed on a “pending” order for their assigned supplier. The individual products are kept on “hold” until such time as the quantity on order is equal or greater than the quantity in stock. Hold Items look like this on the list

Then the “hold” is removed, and they are included in the next order to that supplier. Items not on hold look like this

The logic the Sales Replacement ordering system uses for placing a product on order is: If the product has sold since the last order was generated then order the quantity that has sold since the last order was generated – if the quantity being ordered is equal or greater than the quantity in stock at the time of placing the order. The Sales Replacement system is extremely simple and has the advantage that accurate stock levels are not required to generate orders. This method has some limitations in that products are ordered much more frequently than with the other methods. There may also be a tendency to have a stock quantity on hand surplus to that which is actually required. Therefore this method is most suitable for products which are both slow moving and are ordered on a frequent basis. Case quantities must always be “1”. In this way it would NEVER be suitable for certain products where it is required that minimum case quantities must be purchased from the supplier.

Sales Replacement is most useful for slower moving items – and Pharmacy has many such products. In other retail sectors really slow items are usually not stocked at all. However, in Pharmacy there a multitude of products which MUST be stocked even though they sell really slowly – probably a few times per month at best. These products must be stocked for strategic purposes because customers expect pharmacies to stock these products.

Re-order Level Ordering or “Just in Time” Ordering

This is used where deliveries are received from that supplier on a continuous or daily basis. You only order the products that are low in stock at the time you are ordering.

Reorder Level Ordering works as follows:

Products are placed on the “pending” orders once the current stock quantity is equal to or less than the reorder level.

The quantity placed on order is always equal to the reorder quantity.

Using this method, the purchase of each product is based on three parameters:

The Current Stock Quantity

The Re-Order Level

The Re-Order Quantity – the quantity that is always placed on order

Say if the Stock Quantity is 4 and the Re-Order Level is set to 3 then the product is not placed on a “pending” order. However, if the Stock Quantity is 3 and the Re-Order Level is 3 then the Re-Order Quantity of product is placed on a “pending” order.

Therefore, the logic used when processing a Reorder Level order is:

If the Stock Quantity is less than or equal to the Re-Order Level then the Reorder Quantity is ordered

This method is the method that is recommended for use where:

The quantity of products sold on a monthly basis is reasonably high – say more than 6 to 12 per month and

The products can be ordered from wholesalers from which the shop is ordering on a daily basis

This method of ordering maintains excellent control of stock quantities, while at the same time having the efficiencies of only ordering these products at intervals that can be controlled by the level at which the re-order quantity is set. For instance, if the re-order quantity is set at a quantity that equates to 14 days sales, then the product will be, on average, ordered every two weeks. On the other hand, if the product is perishable, then the re-order level can be set at one or two day’s stock.

Products are ordered - and only ordered - when they are running low thus, not alone, minimizing stock levels but also ensuring against stock outages.

Manual Ordering

If Manual ordering is selected for a product then the item will never go automatically onto the pending tab. You will have to manually keep track of stock of this item and add to the order when needed. To do this you can use the Add product function in the manage orders screen and then search and add item manually to order.

Replenishment level ordering

This method is used for suppliers who supply you on a set periodic basis. With such suppliers you order all their products at the same time and you do not usually reorder them until the next order is given to that supplier. With this method, if a product is out of stock you are not usually in a position to order that particular product on its own.

Note that with Replenishment Suppliers, in the manage orders tab you have a “Generate Order” option once the supplier has been selected. On clicking this button the system then generates a purchase order as follows:

The system searches all products assigned to the supplier in question and any products which have a replenishment level greater than zero and whose current stock is less than the replenishment level is placed on the order. The quantity ordered is equal to the replenishment level less the stock level rounded up to the nearest case quantity.

There are many suppliers from which shops can only order from on an order cycle basis – once per month or indeed once every two months. When this is the case, then the only suitable method is the replenishment level method.

The logic behind this method is that each product is ordered in sufficient quantity to bring the stock levels up to the quantity which will be sufficient to ensure that there will be sufficient in stock until the next order from that supplier arrives on the shop floor.

The following is how to generate and implement replenishment Ordering:

Go to your suppliers in Config->Suppliers and search for the supplier you wish to use for replenishment ordering. When you have found that supplier click on the edit button

Set Supplier for Replenishment ordering

When on the Suppliers maintenance screen scroll down to the bottom and tick the option ‘Generate orders automatically for this supplier based on Replenishment Levels’

Derive Replenishment Levels

Go back to the supplier screen and tick the supplier you have just set to be for Replenishment ordering. After you have ticked the supplier click on ‘Derive Replenishment Levels’

The Replenishment level screen is used to select the Sales Date range from which you want to calculate your replenishment levels from. Ignore replenishment levels <= : You put in a qty number here to ignore, e.g. If you put in 2 then any replenishment levels that come back as 2 or less will be ignored.

Replenish Days

Go back again to the supplier screen and tick the supplier you have just set to be for Replenishment ordering. After you have ticked that supplier click on ‘Replenish Days’

Fill in the following with the relevant information:

Days Supplier Required (How much you need of an item over x no of days given the Sales history range you are looking at)

Lead Time Days (Days between when you make the order and when you get the order in)

Buffer (Period you can pick yourself. Calculate in %)

Replenishment Days, calculated from the info you have given in the three previous fields

Generate Order

Once you have all the details in for the supplier to generate a replenishment order go to orders and select the supplier.

To generate the order click on the Generate button

This will start the process of generating a replenishment order given the information you provided in the previous steps.

Note: If there are any items that have negative stock, it won’t generate orders for those items. You do have the option to either cancel generating the order to fix the qtys on those items listed or to continue on generating the order without those items.

An order will generate for you using the following calculation:

(Total Sales / No of Sales Days) x Replenishment Days = Qty to Order E.g. Feb Sales = 229 Sold /28 days = 8.178 x 21 days (Total No of Replenishment Days) = 172 172 - 21 (Qty in stock) = 161 (Amount to order)

Please note the following when generating a replenishment order: Any items whose stock is negative is ignored.

Any items in waiting to check in is ignored.

Any items with qty lower or equal to the ‘Ignore replenishment levels’ value is ignored

Any items already on the Manage orders list will be ignored and the qty to order won’t be updated on them.

Additional Ordering Parameters

There is another useful facet to the automatic generation of orders whereby pre-set parameters are applied to the purchase orders. These parameters are:

Expected Discounts

Expected Bonus Quantities

Minimum Order Quantities – required to obtain discounts and bonuses are all automatically applied to the order when it is being generated.

These parameters are displayed, or edited, on the product maintenance screen – and can also be applied to multiple products using product updates.

The benefits of these parameters are:

Shop staff are alerted to expected discounts and bonuses at the time of generating the order and at the point of delivery. This ensures that pre–negotiated bonuses and discounts are always checked for.

The minimum quantities required to achieve the bonuses and discounts are always ordered

The correct cost price of the goods is recorded, thus ensuring that correct profit margins are stored on the system