Purchase order period
What is Purchase Order Period?
The Purchase Order Period is the time duration you intend for your ordered inventory to last, from the moment one purchase order is delivered to your warehouse until the next one is expected to arrive. It essentially defines the frequency of your ordering cycles.
Importance:
It directly influences the quantity of goods you need to order in each replenishment cycle. A longer period means ordering more goods at once to cover that extended duration, while a shorter period allows for smaller, more frequent orders.
The purchase order period is often tied to transportation costs. For instance, ordering a full container from overseas might lead to a quarterly or monthly period, whereas sourcing from a local supplier might allow for weekly orders.
Generally, shorter purchase order periods are beneficial as they reduce the amount of inventory held, freeing up working capital and warehouse space.
How Cin7 ForesightAI uses Purchase Order Period:
The system uses the defined purchase order period to calculate the size of each replenishment proposal. It aims to ensure you have enough inventory to cover sales for the duration of the period until the next ordering opportunity.
If the purchase order period is increased (e.g., from one month to two months), the recommended quantity per order will increase to cover the longer duration, and the total number of purchase order recommendations for a given timeframe will decrease.
Setting Purchase Order Period:
Lead times are set automatically based on supply history. Users can however overwrite them manually in the Suppliers settings tab inside the ForesightAI application. You can access the application by clicking on “Forecast and Settings” on the Smart Reorder page in Core.
Purchase order periods for transfers are set in the Warehouse settings inside the ForesightAI application.
Similar to lead times, specific purchase order periods can be set for individual SKUs in the Edit Arena if they differ from the supplier-level settings.
Choose a product from filters.
Then, pick an SKU you want to set purchase order period for, or, change it in bulk.
Then:
If you need to set a purchase order period for one SKU simply change the number in the same row and that's it.
If you need to set a purchase order period for all SKUs change the number above individual SKU rows and then click Confirm.
If you'd like to set the automatic rule for future edits, check the box and click Confirm. It will automatically set a purchase order period number for every future edit with this SKU.
Have a great day!