The status information for each stock item is displayed on the Stock Inquiry screen. This information includes the item's status, recommended orders, key events, and information relating to the status over the item's lead time. In addition, a graphical representation of the item status will be displayed for the full duration until the lead time.
The status information for each stock item will inform you of all Stocked Out and Potential Stockout events during the item's lead time, not just the first event. This allows you to plan more proactively with a quick visual summary of the stock item status, ensuring smoother operations and more reliable inventory planning, ultimately minimizing unexpected disruptions.
In addition, the method used to calculate an item's status has been enhanced from a levels-based calculation to a projection-based calculation, providing improved accuracy in determining an item's status.
What does this mean for your data and what might you see?
The value of Stocked Out and Potential Stockout items may be higher than anticipated, as the full lead time is taken into account during the calculation of the status, resulting in more accurate information.
Recommended orders may change if you historically did not make use of the projected orders module. More notable changes would include increased quantity for recommended orders when existing orders are due to arrive well beyond the lead time.
Item Status Prioritization
When an item's projected stock falls under multiple status categories, a hierarchical assignment highlights the most critical status. This prioritization system guides immediate action and focuses on issues with the highest potential impact. The status hierarchy is as follows, from most critical to least:
Stocked Out: This is the highest priority, demanding immediate attention due to direct impact on sales and customer satisfaction.
Potential Stockout: While not as immediately detrimental as a stockout, this status signals an impending shortage that requires prompt intervention to prevent lost sales.
Surplus Orders: These are prioritized over Excess stock because they represent an opportunity for preemptive action (e.g., cancellation, quantity reduction, or delay) before stock physically arrives.
Excess Stock: This indicates capital tied up in inventory that could be better utilized elsewhere, requiring strategic decisions to reduce it.
OK: This status indicates healthy stock levels with no immediate intervention required.
Below are examples illustrating the information associated with each status type.
OK status
An item is classified as OK when its physical stock is projected to remain between zero and the maximum (Safety Stock + Replenishment Cycle (RC)) stock level.
Consider the example above. Although the stock is projected to dip into safety stock within a lead time, it is not projected to stock out and is thus considered to be OK.
An ideal order of 2423 has been calculated, but due to supplier constraints such as Minimum order quantity (MOQ) and Order multiple (OM), the Recommended order quantity (ROQ) has been rounded to 2424 to respect both the MOQ of 1296 and the OM of 6.
The default Look Forward Days for orders from this supplier is 30. This value represents the total projected orders, including the immediate Recommended Order Quantity (ROQ), spanning from today up to 30 days into the future. In this specific case, no additional recommended orders fall within this 30-day window; hence, the values are the same.
If placed today, with a Look forward days value of 1, the ROQ would be 2424 units. However, the default Look forward days for orders from this supplier is set as 30 days, or 2.4k units, resulting in an order of 4824 units if placed today.
For further details on how supplier constraints influence the ROQ, refer to the article: How Is the Recommended Order Quantity (ROQ) Calculated? For a definition and usage guide for the "Look Forward Days" parameter, consult the article: Look forward days: Using and setting a default by supplier.
Additional examples
Additional examples
Example 1: OK Status with Effective Maximum Level
In the example below, the Net stock of 1.2K units appears significantly higher than the average maximum level of 150 units, which might initially suggest an Excess Stock status.
Typically, the Recommended Order Quantity (ROQ) is calculated as the Order-up-to level minus Net stock, but only if the Net stock falls below the Reorder point. In this instance, as the Net stock is above the Order-up-to level, it could be perceived as having excess.
However, notice the Effective Maximum Level (represented by the dotted line above the standard maximum level).
This occurs because the Replenishment Cycle (RC) must account for a large Minimum Order Quantity (MOQ) of 3024 units. Consequently, the Effective RC extends to 999 days, rather than the originally stipulated 90 days. This adjustment results in a calculated Effective Maximum Level of 3k units.
Since the average Net stock of 1.2K units falls between the minimum level (Safety Stock - SS) and the Effective Maximum Level (Effective RC + SS), this item is correctly assigned an OK status.
Example 2: Normal Projection with Multiple Orders
In the example below, projected recommended orders appear roughly six weeks apart, yet the first one isn't expected to be received until four months (17 weeks) from today.
This scenario is entirely normal. It's crucial to remember that the Replenishment Cycle (RC) doesn't necessarily equal the Lead Time (LT). As a result, you might have multiple orders in the pipeline, all strategically scheduled for delivery precisely when needed.
For a more detailed explanation, please refer to the article: Replenishment cycle is not lead time.
Surplus Orders
Surplus Orders are defined as existing purchase orders that, upon receipt, are projected to result in Excess Stock by pushing the inventory level above the determined maximum.
Consider the example above. The orders scheduled to be received on 29 November and 10 January will put our stock above the maximum level of SS + RC, or 6.8k units, and are thus considered surplus orders.
Possible actions to address surplus orders include cancelling the order, delaying its receipt, or reducing the ordered quantity.
Excess Stock
Excess Stock is characterized as available stock significantly exceeding the Order-up-to level (SS + Lead Time (LT) + RC).
For stocked items, the excess quantity is the difference between the available stock and the order-up-to level.
For non-stocked items, the excess units are equivalent to the available stock.
For obsolete items, the excess units are equal to the stock on hand.
Consider the example above. Both the opening stock of 18.3k units and the projected closing stock after a lead time of 10.2k are higher than the max Order-up-to level of 6.2k units.
Possible actions to mitigate excess stock include promotional activities, offering combo deals, price reductions, or even selling the surplus to competitors.
Potential Stockout
Potential Stockout items are those predicted to deplete their stock before either a pending purchase order arrives or an order placed today can be received.
You'll notice this item has an Effective Maximum Level. This occurs because the Replenishment Cycle (RC) must accommodate a large Minimum Order Quantity (MOQ) of 1008 units. As a result, the effective RC extends to 113 days, significantly longer than the originally stipulated 45 days. This adjustment leads to a calculated Effective Maximum Level of 1.2k units (SS + RC), reflecting the practical constraints imposed by the MOQ.
Possible actions to avert a stockout include expediting the pending order, utilizing air freight for faster delivery, or sourcing from an alternative supplier to prevent customer loss.
Additional examples
Additional examples
Example 1: Understanding Recommended Orders vs. Firm Receipts
In the example below, the item's Net stock unexpectedly dips into negative territory despite an order appearing two weeks prior.
This behavior occurs because orders indicated in purple are recommended orders, not firm receipts. A recommended order still requires the Lead Time (LT) of 120 days to elapse after it has been placed before it can arrive. Conversely, the firm receipt (shown in gold) scheduled for December 24th was placed a full LT (120 days) before that date, which equates to three weeks before today.
Example 2: The Importance of Graphical Representation in Status Determination
Consider the example below.
If we solely analyze the item's Policy and Inventory Position panels, we might calculate the ROQ as the Order-up-to level minus Net stock, only if Net stock is below the Reorder point. In this specific case, as the Net stock is above the Reorder point, the item might initially appear to have Excess Stock or Surplus Orders.
However, as evident from the graph, timing is critical. The surplus order is scheduled to arrive too late, after the item has already experienced a stockout. This highlights why relying solely on the Policy and Inventory Position panels is insufficient for accurately determining an item's stock status. Utilizing the visual representation provided on the Status panel is imperative for a complete and accurate understanding.
Example 3: Prioritization of Potential Stockout Status
Consider the example below. The stock is projected to run out on November 12th, 17 days before an order of 2.6k units is scheduled to arrive. This incoming order, however, is projected to subsequently result in Excess Stock.
Due to the defined stock status prioritization, even though the item also has Surplus Orders, its primary status is Potential Stockout.
Example 4: MOQ Without Affecting Effective Maximum Level
Consider the example below.
Despite having an MOQ of 48, this item does not display an Effective Maximum Level. This is because the originally stipulated Replenishment Cycle and the Effective RC remain equal, indicating that the MOQ does not impose a constraint that extends the effective replenishment period beyond the standard RC.
Stocked Out
An item is categorized as Stocked Out if it meets the following criteria:
It is classified as a stocked item.
Its current available stock is less than or equal to zero.
It currently has active demand (e.g., sales forecast, Bill of Material (BOM) demand, or distribution demand).
It is important to note that an item with zero available stock will not be considered Stocked Out if there is no current demand for it.
An item's available stock may be negative if back-orders are accommodated. For more details on the definition and application of back-orders, refer to the article: Policy - Projecting back orders.
Consider the example above. The stock has already dipped to a negative value. In 6 weeks, an order of 5.3k units will arrive, resulting in excess stock.
Due to the established stock status prioritization, despite also having Surplus Orders, the item's primary status is Stocked Out.
Additional example
Additional example
Example 1: Stocked Out with Subsequent Surplus Orders
Consider the example below. We're currently Stocked Out. In approximately a week, we're projected to receive an order that will immediately put us into an Excess Stock position, followed by another Surplus Order two weeks later. These upcoming surplus orders should be actioned promptly to avoid accumulating unnecessary excess inventory.
Due to the defined stock status prioritization, even though the item also indicates Surplus Orders in its projection, its primary status remains Stocked Out. This highlights the system's focus on the most critical immediate issue.