Inventory Management

How to Order Inventory: A Quick Guide

October 17, 2022 • 6 min read

Just about every business needs to order inventory, but that process can look a lot different for every unique company. That’s because every business has very different inventory needs. For example, a construction company building 100 different houses at one time will have one strategy, whereas a local event planning company will have another. 

Regardless of your business’s industry and the length of your inventory list, ironing out an inventory reordering procedure is essential. Knowing exactly what you need, what you have, and where it’s located can ensure your business’s customer demand is met swiftly without jeopardizing your bottom line. 

Fortunately, there are some best practices that businesses of every shape and size can utilize when ordering inventory. This article will touch on a simple, five-step process for ordering inventory. Each of these touchpoints can help take the hassle out of reordering inventory.


1. Know what you need

The first step to ordering inventory is knowing what your business needs to satisfy demand. If you haven’t done so already, now is the time to sit down and figure out precisely what products, supplies, equipment, machinery, and more your business requires to remain operational until your next delivery of inventory arrives.

It’s very possible you already have this list. If you do, take some time to ensure it’s still accurate. Revisit your forecast. Do your predictions still seem accurate? Has anything changed—the weather, the economy, styles, and trends—that might affect what your customers want and when? Do your forecasting methods still make sense for your business? These are all questions to address now.

From there, you’ll want to consider whether your inventory minimums still make sense. For example, has lead time changed for any of your suppliers? Do you want to carry more safety stock to hedge your bets against inflation or a tumultuous supply chain? Whatever your reasons are for holding inventory, ensure they’re good ones, and adjust your inventory needs accordingly. 

When you’re done, create a list that articulates exactly what your business needs—and how much of it. If you’re using inventory management software or an app like Sortly, you can input this information directly into each item’s inventory minimum field. (You can also set low stock alerts at this time—more on this later.)


2. Know what you have

Now that you know what you need, you’ll want to determine exactly what you have. Whether you have one location or several dozen, this process cannot be skipped. If your business has maintained a solid inventory system, you won’t need to conduct a full inventory audit. Instead, you can simply maintain perpetual inventory as items come and go, and sit down and review your inventory records when it’s time to order.

However, if you do not have an accurate picture of your inventory in storage, you’ll need to count it. If this seems daunting, consider spreading out the process over a few weeks or more. This strategy, called inventory cycle counting, can help you get organized without having to shutter your business. 

If you haven’t done so already, this inventory count might be the perfect time to switch to a barcode inventory system. In Sortly, you can simply scan each item’s barcode or QR code with the in-app scanner, then update inventory levels accordingly. Later, as items arrive or are consumed or sold, you can simply check them in and out. The result? Always-accurate inventory records—and inventory audits that are a formality instead of a weeks-long project.

Using an inventory app, you’ll also enjoy increased transparency, especially if you manage inventory across multiple locations. For example, with the click of a button, you can see what’s on hand in one warehouse, two warehouses, or all twenty of them. 


3. Know when to order inventory

Now that you know what your business needs and what your business has, you’ll need to determine precisely when to order inventory. Depending on how many suppliers your business relies on, you may choose to place orders one day a week, two days a week—or even every day.

Review your suppliers’ lead times and supply delays to determine what’s best for your business. Some vendors only accept orders on certain days, and others only deliver on others. Once you’ve pieced the puzzle together, set clear guidelines for reordering. Many businesses go so far as to post when orders are placed and when deliveries arrive. This sets clear expectations and helps everyone on the team prepare to count inventory, place orders, and receive inventory, too.

If you’re using Sortly, you can also use low stock alerts, expiration alerts, and other automation features to protect you against costly stockouts. This can be especially helpful if you have high inventory turnover, if that turnover rate is rather unpredictable, or if you manage inventory across multiple locations. 


4. Place orders accurately

When placing your orders, you’ll want to ensure each request to your vendors is clear and complete. Whether you email orders to your vendors, purchase items through their website, or fax orders on a decades-old order sheet, verify the accuracy of each order before you complete the transaction.

By ensuring you place orders correctly, you’ll avoid the headache of not getting exactly what you need come delivery day. This is extra important because, for many businesses, not having enough inventory could cause work stoppages, unhappy customers, or both. And the solution—purchasing inventory locally at a higher retail price—only cuts deeper into your company’s profits.


5. Continue to improve your ordering strategy over time

Like most other aspects of running a business, your inventory ordering strategy won’t be perfect on day one. What matters most is that your business continues to tweak the strategy weekly. By optimizing the process—and correcting problems as they arise—your company will, slowly but surely, develop a truly effective reordering strategy.

But to do this, you’ll need to not just monitor inventory management internally but also keep an eye on your suppliers’ performance. If a supplier is falling short—whether that’s by not fulfilling orders fast enough or sending products that are often damaged—you may need to make a change. Don’t be afraid to talk to your suppliers about what’s working and what needs improvement.

And remember, you can always search for new suppliers whose offerings better fit your business’s needs.


About Sortly

Sortly is a top-rated inventory management software solution designed to help your business tackle every aspect of inventory management. From building an inventory list to determining inventory minimums to setting low stock alerts, Sortly’s intuitive app makes ordering inventory less stressful and a lot more accurate.

Curious to see how Sortly can help your business get organized? Claim your free, two-week trial of the software today.