Reorder Points: The Inventory Math Every Workshop Owner Should Know

A reorder point is the stock level at which you should place a new order so the replacement arrives before you run out. Get it wrong in one direction and a technician is blocked waiting on a part mid-job. Get it wrong in the other and you have cash sitting on a shelf as unsold inventory.

The formula itself is simple: reorder point = (average daily usage × supplier lead time in days) + safety stock. The hard part is getting accurate numbers for each variable, which is exactly where most shops guess instead of calculate.

Average daily usage should come from actual sales history, not intuition — a part that 'feels' fast-moving might only sell twice a month. Pull at least 90 days of usage per part to smooth out seasonal noise before computing the average.

Lead time is the number most shops underestimate. It is not the time the supplier quotes — it is the time it actually took on your last five orders, including the days the part sat in customs or transit. Track actual lead time per supplier, not promised lead time.

Safety stock is your buffer against demand spikes and late deliveries. A reasonable starting point is half of your average usage during the lead time window, increased for parts where a stockout blocks high-margin jobs like brake or suspension work.

Once reorder points are set per part, the system should trigger automatically — no one should be walking the shelf to 'eyeball' stock. Shops that automate this typically cut both stockout-related delays and dead inventory by more than half within a quarter.