In this article
A distributor can have a full warehouse and still turn away customers. The stock that fills the shelves may be slow to sell, while the items customers order every week run out. Both problems can start with the same purchasing decision when buyers work from supplier offers or urgent requests without seeing demand, existing commitments and incoming stock together.
Check what will be available when customers need it
A stock balance is a snapshot. Before raising an order, check what is usable at the location that needs it, what customers have already reserved and what is due to arrive before the next requirement. Stock in transit belongs in the plan with an expected arrival date. Damaged stock and goods awaiting inspection need their own status.
Use the same unit of measure across purchasing and inventory. If suppliers sell by the carton and branches issue individual units, confirm the conversion before calculating the order quantity. Include confirmed inbound purchases and transfers in the review so an urgent request does not duplicate supply already on its way.
Match buying rules to demand and lead time
Set replenishment triggers using expected demand during the time it takes to replenish, plus a buffer appropriate to demand and delivery variability. Review the assumptions when a supplier starts delivering late, sales become seasonal or a promotion changes expected demand. Check actual lead time from order release to usable receipt, including time spent waiting for inspection where relevant.
Supplier minimum orders and pack sizes can leave the business with more than it can sell within a reasonable period. Before approving an exception, compare the expected sales window, available storage and the cash tied up in the purchase. Check whether another branch can use the same stock or whether the supplier can deliver it in stages.
Make exceptions visible to the people who own them
Give purchasing and inventory teams a shared view of shortages, open purchase orders, expected arrival dates and slow-moving stock. Assign someone to confirm overdue deliveries and update dates so the plan reflects the latest supplier commitment. Give urgent purchases a reason code and review recurring reasons with the team that can fix them.
Use a consistent check before approval. Ask whether the order covers a real shortage, duplicates an open order or pushes stock beyond expected demand. Document why an exception is justified and who will review it after the stock arrives.
A distributor finds shortages and excess on the same route
In this hypothetical case, a packaging distributor’s branch repeatedly runs out of a popular carton size. Purchasing responds to urgent messages by placing fresh orders. At the same time, the central warehouse is holding a slow-selling carton size bought to meet a supplier minimum.
The planner traces the branch’s shortage through customer orders, stock reservations and open transfers. An incoming transfer was expected after the branch’s largest order was due. The planner also finds another purchase order for the same size with no confirmed arrival date. The issue is supply timing, and a duplicate order could leave excess once both shipments arrive.
Purchasing confirms the dates with the suppliers and checks whether the central warehouse has unreserved stock it can move in time. The branch updates the customer using the confirmed availability. For the slow-selling carton, purchasing pauses routine replenishment and checks demand at other branches before approving any further order. The team then compares stockout days, emergency purchases and ageing stock across comparable periods.
Measures for the joint review
Stockout days. Count days when a planned item has zero usable stock at a location where it is expected to be available. Group by item and branch.
Order line fill rate. Divide order lines supplied in full by the original promised date by all lines due in the period. Record shortages separately from other causes of delay.
Emergency purchase rate. Divide purchase orders marked urgent by all purchase orders issued in the period. Review recurring reasons such as late receipts or missed replenishment triggers.
Supplier lead time and reliability. Measure elapsed time from order release to usable receipt and the share of orders received by the original confirmed date. Review variations by supplier and item.
Stock cover. Divide usable, unreserved stock by expected daily demand that is still uncommitted. Review confirmed inbound stock separately and flag items with no forecast demand for an ageing review.
Aged stock share. Compare the quantity or value of usable stock older than the agreed age limit with total usable stock on the same basis. Set age limits by category and review transfers and returns before treating stock as surplus.
SERPA can help your team connect purchasing decisions to demand, available stock and supplier lead times so you can protect availability and reduce cash tied up in excess inventory. Enquire for a tailored quote.