order point procedure

The order point procedure, also known as the order point system or order point procedure, is a tried and tested method in the field of inventory management, in which the purchase of article quantities takes place at fixed points in time, but with varying quantities. In contrast, the order point procedure is based on fixed quantities but at variable times.

When using the reorder point method, the company defines a specific reorder point, which marks the time at which an order is to be placed. This decision is usually based on the current stock level and the expected demand during the replenishment period. As soon as the stock level reaches the predefined reorder point, an order is triggered, regardless of the quantity of stock at that time.

Determining an appropriate reorder point is critical to the effectiveness of the reorder point process. Companies must consider factors such as average demand, lead times, safety stock levels and fluctuations in lead time to determine the optimal reorder point. An order point that is set too low can lead to supply shortages, while an order point that is set too high can lead to unnecessarily high inventory levels and costs.

Implementing an efficient reorder point process requires continuous monitoring of inventory levels and regular adjustment of the reorder point based on changing business requirements and market conditions. By using the reorder point process, companies can optimize their inventory, improve delivery performance and reduce costs.

A well-executed reorder point process helps to streamline the inventory management process and increase efficiency in the procurement of goods, which ultimately leads to increased competitiveness.