Five signs your replenishment is costing you cash

Stockouts and excess stock look like opposite problems, but they usually come from the same cause: reorder decisions based on habit instead of data. Here are five signs it is happening to you.

1. You reorder on a fixed calendar

Ordering every month, whatever the stock level, means some products arrive too late and others pile up. Orders should be triggered by stock cover and lead time, not by the date.

2. Best sellers run out while slow movers pile up

If your fastest products are the ones that stock out, your reorder rules are not following demand. Cash ends up tied to the wrong SKUs.

3. You use one lead time for every supplier

Suppliers differ in production time, reliability and shipping method. A single average lead time makes the plan wrong for most of your catalog.

4. You pay for rush shipping to fix mistakes

An occasional air shipment is normal. If it is a routine way to recover from late orders, you are paying a premium that better planning would avoid.

5. You can't say how much cash is tied up in stock

Inventory on the shelf, in transit and in production is money that is not available for anything else. If nobody can give you that number by SKU, you can't judge which orders are worth placing.

Where to start

Pick your ten most important SKUs. For each one, write down the real total lead time, the current stock cover in days and the next reorder date. That single table usually shows where the problem is.