Supply Chain & Procurement FAQ

Reorder point is the inventory level that triggers a new order — it's demand during your lead time plus safety stock. Safety stock is the buffer inside that number, sized for demand or lead time coming in worse than average. Confusing the two is the most common inventory-math mistake we see.

The simplest usable method is the max-demand method: safety stock equals (peak demand × peak lead time) minus (average demand × average lead time). It's less precise than a service-level formula using standard deviations, but it's transparent and defensible, which matters more for most small and mid-size operations.

Capital cost (what that money would otherwise earn or what it costs to borrow), storage and handling, and risk costs — shrinkage, obsolescence, damage and insurance. Add them as percentages of average inventory value; the total typically lands between 20% and 30% a year, though it varies a lot by category.

No — and treating it as if it is the mistake a scorecard is meant to catch. A weighted scorecard across price, lead time, quality and risk often shows that the cheaper supplier's total cost of ownership is higher once late deliveries or quality issues are priced in.

There's no universal number, but single-sourcing a critical input carries concentration risk that only shows up when that supplier has a problem. Dual sourcing costs more per unit in normal times and less per unit the one time it matters — the guide on resilience walks through how to size that trade-off.

Offshoring optimizes primarily for unit cost, accepting longer lead times and more exposure to shipping disruption. Nearshoring trades some unit-cost advantage for shorter lead times, easier quality oversight and lower disruption risk. Neither is categorically better — it depends on your product's cost sensitivity versus its disruption sensitivity.

Start from your actual requirements and current pain points, written down before you take a single demo — not from a feature comparison chart a vendor built. The software guide on this site walks through a shortlist process that keeps you from buying features you'll never use.

Fewer than you think. Fill rate or on-time-in-full, inventory turns, and one cost metric (like carrying cost or cost per order) covers most of what a growing operation needs. Tracking twenty KPIs that nobody reviews weekly is worse than tracking three that someone actually looks at.

Attach a number to it that a manager already cares about — cash freed up, service level improved, or risk reduced in dollar terms — rather than presenting the change as self-evidently a good idea. The business-case guide walks through the structure that tends to get funded.

No. It can help you structure a comparison framework, work through the reorder point or carrying cost math with your own figures, and explain terminology — but it doesn't have visibility into vendor pricing, contract terms or your specific supplier relationships, so recommending a name would be a guess dressed up as advice.

It depends entirely on your current turns and category mix, which is exactly why this site doesn't publish a blanket percentage. Run your own average inventory value and carrying-cost percentage through the calculator — the 'what one extra turn would save' line is usually the most persuasive number in a business case.

It's not required for most roles, but a recognized certification like CSCP can help formalize practical experience, especially for a move into a more senior planning or procurement role. Whether it's worth the cost and time depends on your career stage and what your employer values — treat it as a professional-development decision, not a prerequisite.