Reorder Points and Low-Stock Alerts: Never Run Out of Parts
The short answer: A reorder point is the stock level at which you place a new order, set high enough that the parts arrive before you run out. The formula is reorder point = (average daily usage × lead time in days) + safety stock. A low-stock alert fires when an item hits that number, turning the math into a prompt to reorder. CRMb tracks usage per item and per location and flags what is running low, so a stockout becomes a decision instead of a surprise.
Running out of a common part is one of the most expensive small failures in field service. The job stalls, the tech makes a supply-house run, and the customer waits. Yet it is entirely preventable with one number per part: the point at which you reorder. Set it right and you never scramble; set it too low, or not at all, and you are back to guessing.
This explains what a reorder point is, how to calculate it, how much safety stock to carry, and how alerts turn the whole thing into a system that watches itself.
What a reorder point is
A reorder point is the inventory level that triggers a new purchase. When stock of an item drops to that level, you order more, timed so the replenishment arrives about when you would have hit zero.
The idea rests on a simple fact: ordering is not instant. Between placing an order and the parts landing on your shelf, days pass, and during those days you keep using stock. If you wait until you are out to order, you are out for the whole lead time. The reorder point is set above zero by exactly enough to cover that gap, plus a buffer for the days demand runs hot or the supplier runs late.
Every stocked item gets its own reorder point, because a fast-moving $2 fitting and a slow, expensive pump are completely different decisions.
The reorder point formula
The standard formula has two parts, demand during lead time plus a safety buffer:
Reorder point = (average daily usage × lead time in days) + safety stock
Work through it for a single part. Say a shop uses about 8 shutoff valves a day, its supplier takes 5 days to deliver, and it wants 2 days of safety stock:
- Demand during lead time = 8 × 5 = 40
- Safety stock = 8 × 2 = 16
- Reorder point = 40 + 16 = 56
So when shutoff valves drop to 56, the shop reorders. The 40 covers normal use while the order is in transit, and the 16 covers a busy stretch or a late delivery. Without safety stock, a single strong week or a one-day supplier delay would leave the shop short.
Here is the same math across a few items so you can see how usage and lead time move the number:
| Part | Daily usage | Lead time | Safety stock | Reorder point |
|---|---|---|---|---|
| Shutoff valves | 8 | 5 days | 16 | 56 |
| Wax rings | 3 | 5 days | 6 | 21 |
| Water heater, 50 gal | 0.4 | 7 days | 1 | 4 |
| Pipe tape | 5 | 3 days | 5 | 20 |
Notice the water heater. Slow usage and a longer lead time still yield a small reorder point, you reorder when you are down to about 4, because you do not want to tie up cash in heaters, but you also cannot be caught with none.
Safety stock: your buffer against surprises
Safety stock is the extra you hold to absorb two kinds of surprise: demand that spikes above average, and supply that arrives later than promised. It is the difference between a reorder point that works on a calm week and one that survives a bad one.
How much to carry is a judgment about risk and cost:
- Carry more for critical parts (a stockout stops a job), for items with unreliable suppliers, and for cheap, small parts where holding extra costs almost nothing.
- Carry less for expensive or bulky items where holding stock ties up real cash or space, and for parts you can get same-day from a nearby supplier.
A simple, practical method is to hold a few days of average usage as safety stock, more for critical or hard-to-get items, less for cheap or fast-to-restock ones. You do not need a statistics degree; you need a buffer sized to how much a stockout of that part would actually hurt.
Min/max: the simple system for busy shops
Reorder points pair naturally with a min/max system, which many shops find easier to run day to day.
- Min is the reorder point, the level that triggers an order.
- Max is the level you top back up to when you order.
The order quantity is simply max − current stock. When an item hits its min, you order enough to bring it back to its max. It is the same logic as par levels on a truck: a floor that triggers action and a ceiling you refill to.
| Part | Min (reorder point) | Max | Order when at min |
|---|---|---|---|
| Shutoff valves | 56 | 120 | 64 |
| Wax rings | 21 | 48 | 27 |
| Pipe tape | 20 | 50 | 30 |
Min/max is popular because it removes two decisions at once: when to order (at min) and how much (up to max). Set the two numbers per item and restocking becomes mechanical. Truck stock works the same way, covered in truck stock inventory for field techs.
Setting reorder points per location
A part is not just "in stock" or "out", it is in stock somewhere. The warehouse can be full while a truck is empty, and the truck's emptiness is what stops the job. So reorder points belong at the location level, not just company-wide.
CRMb's inventory is multi-location, warehouse plus a location per truck or van, so each location carries its own reorder points. The warehouse reorders from suppliers via a purchase order; the trucks reorder from the warehouse via a transfer. That two-tier flow is what keeps techs stocked: the truck's low-stock trigger pulls from the warehouse, and the warehouse's trigger pulls from the supplier before it runs dry.
Set truck reorder points from each truck's real usage, and warehouse reorder points to cover the trucks plus direct job draws. The two layers together mean a busy week on the trucks cannot silently drain the warehouse to zero without anyone noticing.
Low-stock alerts: turning the math into action
A reorder point sitting in a spreadsheet does nothing. It only prevents a stockout if someone acts when stock hits it, and no one is watching 300 part counts by hand. That is what low-stock alerts are for.
An alert fires the moment an item drops to its reorder point, so reordering is prompted, not remembered. CRMb raises low-stock flags per item and per location, so the parts that need ordering surface on their own, and you can turn them into a purchase order to the supplier or a transfer to the truck. The buying side connects through purchasing, and when the PO is received the counts climb back above the reorder point, see what is a purchase order.
The result is a loop that runs without you watching it: usage draws stock down, the alert fires at the reorder point, you order up to max, and the cycle repeats. Stockouts stop being emergencies and become a number the system flags before it hurts.
Frequently Asked Questions
What is a reorder point?
A reorder point is the stock level at which you place a new order for an item. It is set above zero by enough to cover the demand you will have during the supplier's lead time, plus a safety buffer. When stock hits the reorder point, you order, so the replenishment arrives about when you would otherwise have run out.
How do I calculate a reorder point?
Use reorder point = (average daily usage × lead time in days) + safety stock. If you use 8 of a part per day, your supplier takes 5 days, and you want 2 days of safety stock, the reorder point is (8 × 5) + 16 = 56. Calculate it per item, because usage and lead time differ across parts.
What is safety stock and how much should I carry?
Safety stock is extra inventory that absorbs demand spikes and late deliveries. Carry more for critical parts, unreliable suppliers, and cheap small items where holding extra costs little; carry less for expensive or bulky items and parts you can restock same-day. A practical starting point is a few days of average usage, adjusted for how badly a stockout of that part would hurt.
What is the difference between a reorder point and min/max?
They are the same idea expressed slightly differently. The min in a min/max system is the reorder point, the level that triggers an order, and the max is the level you refill back up to. Min/max adds the "how much to order" answer: order enough to bring stock from its current level up to the max.
How do low-stock alerts help?
A reorder point only prevents a stockout if someone acts when stock reaches it, and no one can watch hundreds of counts by hand. A low-stock alert fires automatically when an item hits its reorder point, prompting you to order. It turns a number in a table into a timely action, which is what actually keeps parts on the shelf.
Getting started
Pick your 20 most-used parts and set a reorder point for each: average daily usage times your supplier's lead time, plus a few days of safety stock. That short list prevents the majority of your stockouts.
CRMb tracks usage per item and per location, flags low stock automatically, and turns a shortage into a purchase order or a transfer, on Mac, iPad, and the web. Start free and stop running out of parts.