Building your Order List
Put items onto an Order List
If you want to order stock from your supplier, you're going to need to tell them what you want. While it is possible to write down or call out the products you want and order them manually your TouchStore system provides a number of ways to help you quickly get the products you need to order onto a list for the relevants suppliers and get it sent to them.
The way we achieve this is through what's called a Reorder Method e.g. how do we reorder more stock of this product?
- Reorder Methods
The four methods of reordering are:
- Sales Replacement Method
- The Reorder Level Method
- The Replenishment Level Method
- Manual
The first two methods, Sales Replacement and Reorder Level are product based.
Replenishment ordering is supplier based.s
Products assigned to a Replenishment supplier are always assigned the Replenishment method of automatic ordering.
Products assigned to suppliers that are not Replenishment suppliers can be assigned either the Sales Replacement or the Reorder Level method – or can be assigned to only be ordered manually.
Therefore, another way of looking at this is that a supplier may either be a
- Replenishment Level Method Supplier or
- Not a Replenishment Level Method Supplier
The Sales Replacement and Reorder Level methods can be applied to products that are not assigned to a Replenishment Supplier.
If a supplier is not a Replenishment supplier, then the individual products assigned to that supplier may be automatically ordered either by The Reorder Level Method or Sales Replacement.
They can also be set to be ordered manually, in which case the system will not automatically put such products on order.
Products assigned to suppliers that are not Replenishment suppliers are given a default reorder method in Product Maintenance – that is either, the Reorder Method, Replacement Method, or Manual.
When setting up a product, one of these methods is allotted automatically based on the default method assigned to the supplier of that product.(The default method is assigned to a supplier in the supplier configuration menu option of Rx 365.)
- Sales 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.
- Then the "hold" is removed, and they are included in the next order to that supplier.
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.
At the same time, 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. For instance:
- 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. Take for instance a colour cosmetic such as a lipstick where the minimum case quantity is "3". In this situation, if one product is sold between orders, then the product is placed on an order. As the minimum quantity that can be purchased is "3", then the shop will end up with a stock of "5" of what may be a really slow moving item. And it can get worse. The next time one of these products is sold – it might be six months – then 3 are ordered in again. The stock will then jump to "7"!!
- It can be pretty inefficient as a method of ordering items that are sold every day. Say if a product sells once daily – and an order is sent to the supplier of that product every day. Then that product is ordered 30 times each month.
- The product is part of thirty deliveries per month and must be checked off 30 times
- The product is part of 30 invoices each month - obviously adding to the accounting overhead
- The product is placed on the shelves – and possibly labelled or priced - 30 times per month
- 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 3 and the Re-Order Level is set to 2 then the product is not placed on a "pending" order.
However, if the Stock Quantity is 1 and the Re-Order Level is 2 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, minimising stock levels but also ensuring against stock outages.
