Minimum Order Quantities

In this article

Shelf Planner’s Purchase Order Management now incorporates supplier Minimum Order Quantities (MOQs) into its algorithms to optimize inventory planning and procurement. This guide explains how the MOQ logic works and provides tips to consider when placing orders to make the most of this feature.

How MOQ Logic Works

1. What is MOQ?

MOQ stands for Minimum Order Quantity, which is the smallest quantity a supplier requires for:

• An individual product (product-specific MOQ).
• The total value or volume of an order (overall supplier MOQ).

2. Incorporating MOQ into Purchase Orders

When creating a purchase order, the system uses the following steps to ensure compliance with MOQs:

Calculate Inventory Needs:

• Determine reorder quantities based on current stock levels, forecasted demand, and reorder points.

Check Product-Specific MOQs:

• If the calculated quantity for a product is below the supplier’s MOQ, the system adjusts the order to meet the MOQ.

Verify Overall Supplier MOQ:

• Ensure the total order (across all products) meets the supplier’s minimum order value or quantity. If not, the system suggests increasing quantities of selected products to fulfill the requirement.

Optimize Across Multiple Suppliers:

• If the product is available from multiple suppliers, the system prioritizes suppliers based on cost, lead time, and MOQ compatibility.

What to Consider When Placing Orders

1. Supplier-Specific Requirements

• Review each supplier’s MOQ data stored in their profile. This includes:
• Product-specific MOQ.
• Overall MOQ per order (value or volume).
• Units of measurement for MOQs.

2. Balancing MOQs and Inventory Costs

Be aware that adjusting quantities to meet MOQs can lead to overstocking. Monitor available storage capacity and cash flow when confirming purchase orders.

3. Leveraging Suggestions

The system suggests adjustments to quantities to meet MOQs. Use these suggestions as a starting point and adjust as needed based on:

Expected sales trends.

Seasonal demand.

Budget constraints.

4. Avoiding Order Splitting

If multiple suppliers offer the same product, avoid splitting orders unless necessary. Consolidating orders can reduce shipping costs and improve MOQ compliance.

Using the MOQ Feature in Shelf Planner

1. Viewing MOQ Alerts

When placing an order, the system automatically checks if MOQs are met:

• If a product’s quantity is below the MOQ, an alert is displayed.
• If the total order value or quantity is below the supplier’s overall MOQ, an alert is displayed.

2. Adjusting Quantities

To resolve MOQ alerts:

• Increase the quantities of the affected product(s) to meet the required MOQ.
• Add other products from the same supplier to reach the overall MOQ, if applicable.

3. Manual Overrides

In some cases, you may choose to override MOQ suggestions. When doing so, consider the potential risks, such as increased shipping costs or delayed orders due to unmet MOQs.

Best Practices for Managing MOQs

1. Build Strong Supplier Relationships

• Negotiate flexible MOQ terms, especially for high-volume or long-term contracts.
• Discuss alternative solutions for small orders, such as combining them with other buyers’ orders.

2. Regularly Update Supplier Profiles

• Ensure supplier profiles in Shelf Planner reflect the latest MOQ requirements to avoid errors.

3. Analyze Historical Data

• Use Shelf Planner’s reporting tools to evaluate how often MOQs impact orders. Identify patterns to optimize inventory planning.

4. Plan for Seasonal Demand

• During peak seasons, larger orders may naturally meet MOQs. During slower periods, plan orders carefully to avoid overstocking.

FAQs

Q1: What happens if I don’t meet a supplier’s MOQ?

If an MOQ is not met, suppliers may refuse the order, delay processing, or charge additional fees. Always aim to meet MOQ requirements or communicate with your supplier for exceptions.

Q2: Can I set different MOQs for the same product from different suppliers?

Yes, Shelf Planner allows you to configure product-specific MOQs for each supplier. The system automatically selects the most cost-effective supplier based on your input and the MOQ requirements.

Q3: What if meeting an MOQ results in overstocking?

Consider the following options:

• Increase promotional efforts to sell excess stock.
• Store excess inventory strategically to reduce handling costs.
• Negotiate with suppliers for reduced MOQ terms in the future.

Conclusion

The MOQ logic in Shelf Planner’s Purchase Order Management is designed to simplify procurement while ensuring compliance with supplier requirements. By understanding and leveraging this feature, you can minimize costs, avoid supplier issues, and maintain optimal inventory levels.