Choosing the lead time and days of stock
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Written by Monica
Updated over a week ago

Before using replenishment recommendations, you must configure your variants' lead times and days of stock.

Lead time is the amount of time that elapses between placing a purchase order and receiving its products into stock.

Days of stock is the period of time for which you would like to have enough stock - in other words, the stock cover. The days of stock also represents your purchasing frequency.

In this example, Inventory Planner recommends that you purchase 311 units of the Mango dress to arrive in 14 days if you place your purchase order today. After arrival, this order will cover the following 30 days.

Choosing a lead time

The lead time will usually depend on your suppliers. It encompasses the amount of time it takes for your supplier to receive your purchase order and dispatch the goods, as well as the subsequent shipping time. It can also include any manufacturing or processing time needed to make the goods ready for sale.

While your suppliers will often supply you with a lead time, you can see their average lead times by going to Reports > Good received note and look at the "Average lead time" column.

When in doubt, add additional days to the lead time period.

Choosing the days of stock

The optimal days of stock, or stock cover, is largely dependent on your business. Factors such as storage costs, overstocking, potential stockouts and minimum order quantities will all play into deciding the optimal days of stock period entered into Inventory Planner.

You should also consider the implications of the lead time and days of stock relative to one another.

How the lead time and days of stock impact your purchasing processes

This is the recommended scenario.

Days of stock can be seen as the frequency of purchasing. If you purchased your stock to last 90 days, you should place your next purchase order for this supplier in 90 days (assuming that projected sales are correct).

When the lead time is less than the cover, you don't have to take immediate action once your stock is received.

For example, if you received products for the following 90 days and the lead time is 30 days, you have 60 days until you must reorder stock.

Scenario 2: The lead time is equal to the days of stock

If the lead time is equal to the days of stock, immediately after receiving products from a supplier, you should place another purchase order to ensure you restock in time.

Scenario 3: The lead time is more than the days of stock

If your lead time is very long (>90 days) and you don't want to store too much stock, you will end up with the lead time being more than the days of stock.

In this situation, you'll have to have multiple pending deliveries from your supplier to ensure you're able to meet demand.

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