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Benefits of Purchasing Management Software

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ADS Solutions

Distributors’ single biggest investment is in their inventory. So, making your investment in inventory work more efficiently can have a huge impact on your bottom line. You can optimize your inventory purchasing and automatically update your inventory reorder parameters based on actual results with the right purchasing management software. Inventory and purchasing software can also help you reduce your PO Cycle Time and better manage your Supply Chain.

How Inventory Replenishment Works

In good purchasing management software, replenishment generally follows this kind of flow. When the inventory quantity of a particular product falls to its minimum level (referred to as the Min Qty or the Reorder Point) it’s time to reorder. The Min Qty represents the quantity of that product expected to be sold during the Lead Time (which is the time it takes the vendor to deliver the replacement stock once a PO is submitted), plus Safety Stock. Safety Stock represents the distributor’s buffer quantity that ensures against stock-outs and is usually expressed as a percentage of the Lead Time Quantity. The reorder quantity is the amount needed to get back to the Max Qty. The Max Qty is the Min Qty plus the quantity expected to be sold during the PO Cycle Time.

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