The cost of an empty shelf
When a regular customer asks for an item and you do not have it, you lose more than one sale. They buy it from the next shop, and sometimes they buy the rest of their list there too. Running out of fast-moving items like sugar, tea, oil and atta is one of the quickest ways a kirana store loses customers.
The opposite problem is just as real. Overstocking slow items locks your money on the shelf, and some goods expire. A reorder level helps you avoid both.
What a reorder level is
A reorder level is the stock quantity at which you place a new order. It should be high enough to last until the new stock arrives, with a small buffer for a busy day.
A simple way to work it out: reorder level = average daily sale x days your supplier takes to deliver + a safety buffer. If you sell 8 packets of tea a day, the supplier takes 2 days, and you keep a buffer of 8, your reorder level is 24 packets.
Step-by-step: setting levels for your shop
- List your 50 to 100 fastest-moving items first; do not try to cover everything on day one
- Find the average daily sale for each from your recent bills
- Note how many days each supplier takes to deliver after you order
- Add a buffer for weekends, festivals and month start when sales rise
- Write the reorder level against each item
- Check and adjust the levels every month or two
Seasons and festivals change everything
Sales are not flat through the year. Before Diwali, demand for dry fruits, sugar, ghee and oil goes up. In summer, cold drinks and ice cream move faster. During exams and holidays, families shop differently.
Raise reorder levels a few weeks before a known busy period, and lower them again afterwards. If you keep the same level all year, you will either run out in the season or overstock after it.
Supplier lead time matters
Some suppliers deliver the next morning. Others come once a week on a fixed day. The reorder level for an item from a weekly supplier must cover a full week of sales plus a buffer. Group items by supplier and check all of them on the day before the supplier visits, so one order covers everything that is low.
Slow-moving and expiring items
For slow items, keep the reorder level low and order smaller quantities more often if the supplier allows it. For items with short expiry such as bread, curd and some snacks, order closer to actual demand and check dates when stock arrives.
Once a month, look at items that have not sold for a long time. Decide whether to run a small offer, return them to the supplier if possible, or stop stocking them.
Common mistakes
- Setting one reorder level for every item regardless of how fast it sells
- Counting stock only when you remember, so levels are useless
- Not updating stock when goods arrive, so the numbers drift
- Ignoring supplier delivery days when setting levels
- Never revisiting levels after the season changes
A worked example
Take a shop that sells about 6 packets of a popular biscuit a day. The distributor visits every Tuesday and Friday, so the longest gap between deliveries is four days. Four days of sales is 24 packets. Add a buffer of one busy day, 6 packets, and the reorder level becomes 30. When stock reaches 30 on the day before the distributor visits, you order enough to bring it back to your normal shelf quantity.
Now take a premium jam that sells one jar every three days. A reorder level of 30 would lock up money for months. For this item, a level of 3 jars is enough, and you order a small quantity each time.
How Bhandarika helps
Reorder levels only work if your stock numbers are correct. In Bhandarika, every bill reduces stock and every purchase entry adds to it, so the count stays close to what is on the shelf. You set a reorder level per item and get an alert when it is reached.
The low stock list shows what to order before the supplier calls. If you run more than one store, the multi-store view shows which branch is low on what. The D&D Technology team can show you this on a demo call.
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