Reorder Points Explained: The Fuel Light Analogy
Most warehouses I've seen reorder one of two ways: someone notices the shelf is getting thin and fires off a PO, or they run out completely and spend a Tuesday morning calling three suppliers to find out who can ship today. Neither of those is a system. Both of them are exhausting.
Here's the thing about your fuel light. It doesn't come on when you're on empty. It comes on when you have roughly 50 miles left — enough runway to actually do something about the problem before it becomes a crisis. That's a reorder point. Not zero. Not "almost zero." A calculated threshold that triggers action while you still have options.
In inventory terms, your reorder point is: average daily usage multiplied by your supplier lead time, plus a buffer for variability. If you sell through 30 units a day and your supplier takes 5 days to deliver, you need to reorder when you hit 150 units on hand — before you factor in any safety stock. A product with a reliable supplier and stable demand might only need a thin buffer. Something that spikes seasonally or ships from overseas needs a much thicker one. The math isn't complicated. The discipline to actually run it for every SKU is where most operations fall short.
Where the fuel light analogy breaks down: your car has one tank. You might have 4,000 active SKUs, each with its own lead time, its own demand pattern, its own supplier quirks. You can't eyeball that. You need counts you can trust so your on-hand numbers are real, not whatever was in the system from the last cycle count three weeks ago. Bad count data means your reorder points trigger too late, or not at all.
If your team is still running on instinct and adrenaline, the fuel light is a good place to start thinking differently. Yuneva builds tools to help with the count side of that equation — www.yuneva.com. CountIt, the mobile counting app, is at www.count-inventory.com.
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