A Reorder Alert Costs Nothing to Set Up. Running Out of Your Best Product Costs Everything.
Reorder level alerts prevent stockouts that cost you AED 50K per incident. Setting them up takes 10 minutes per product. Here is why you still have not done it.
The Cost of Running Out
A reorder level alert costs nothing to set up. Running out of your best selling product 4 times per year costs everything that each stockout represents in lost sales and broken trust. Your top product generates AED 150K per month in revenue. When you run out, customers do not wait. They call your competitor. The stockout lasts 5 days because your supplier needs 5 days lead time and you placed the order 5 days too late. Five days of zero sales on a product that averages AED 5K per day. That is AED 25K in immediate lost revenue. But immediate revenue is the small number. The real damage is the customers who found an alternative during those 5 days and never came back. If 20% of them switch permanently, you lose AED 30K per month in recurring revenue. Per stockout. Four stockouts per year. Do the math.
Why Stockouts Keep Happening
You know your reorder point. Somewhere in your head or on a sticky note, you know that when product X drops below 200 units, you should reorder. But nobody checks the stock level daily. Your warehouse person checks when they notice the shelf looks thin. By then, you are at 50 units with 5 days of lead time and 3 days of stock remaining. The order is placed urgently. Your supplier charges a rush premium. The shipment arrives 2 days after you hit zero. Two days of turning customers away. This pattern repeats because the check is manual. Human attention is finite. Your warehouse handles 500 SKUs. Nobody can monitor 500 stock levels daily through visual inspection or spreadsheet review. Attention goes to the items that are obviously running low. The ones in the middle range get ignored until they are critical.
What Automated Reorder Alerts Change
In ERPNext, every item has a reorder level. When stock drops to that level, the system sends an alert. Not tomorrow. Not when someone remembers to check. Immediately. The alert goes to the purchasing manager, the warehouse supervisor, and anyone else you designate. Setting the reorder level takes 10 minutes per item. For your top 50 products, that is a half day of work. One time. After that, the system monitors continuously. Better yet, the system can generate a material request automatically when stock hits the reorder level. The request routes to the approver. The approved request converts to a purchase order. The PO goes to the supplier. No human needed to notice, report, or initiate the reorder. The system handles the entire chain. A starter plan at AED 1,999 per month includes reorder level configuration with automated alerts and material request generation. The enterprise tier adds lead time based reorder calculations that account for supplier delivery times, so the reorder triggers early enough to arrive before stockout.
The Stockout Cost Nobody Tracks
Your financial statements show revenue for the month. They do not show the revenue you did not earn because the product was not available. That invisible number is your stockout cost. And it is usually larger than any line item on your P&L. Here is a rough calculation. Take your top 10 products by revenue. Estimate how many days each was out of stock last year. Multiply each by the product average daily revenue. Add them up. That is revenue you left on the shelf. Except there was nothing on the shelf. For most trading companies in Dubai, annual stockout cost is between 5% and 12% of total revenue. On a AED 10M business, that is AED 500K to AED 1.2M in sales that did not happen because the product was not there when the customer wanted it. Pull your sales data for the last 12 months. Find every product that showed zero sales for 3 or more consecutive days. Cross reference against supplier delivery receipts. How many of those zero sale periods were stockouts versus genuinely slow periods? If you cannot tell the difference, that is the problem a reorder system solves.
Frequently Asked Questions
How do I calculate the right reorder level for each product?
Reorder level equals average daily consumption multiplied by supplier lead time in days, plus a safety stock buffer. ERPNext can calculate this automatically based on your historical consumption data. OSForBiz configures optimal reorder levels during implementation.
Can the system generate purchase orders automatically?
Yes. ERPNext can create material requests automatically when stock hits the reorder level. With approval workflow configured, the material request converts to a purchase order and routes to the supplier. The entire chain from alert to order can run without manual intervention.
What if different products have different supplier lead times?
ERPNext stores lead time per supplier per item. The reorder calculation accounts for each product specific lead time. A product with 3 day lead time triggers earlier than one with 10 day lead time, adjusted for consumption rate.
Stop Losing Sales to Empty ShelvesWhen You are Ready,
We are Here.
Book a free consultation. We will analyze your stockout history and configure reorder alerts that keep your best products in stock permanently.Book a free consultation. We will analyze your stockout history and configure reorder alerts that keep your best products in stock permanently.