Inventory how-to

How to avoid overstocking

Overstocking happens when you order on gut feel instead of actual sales speed, lead time, and a sane cover target.

Short answer: Overstocking happens when you order on gut feel instead of actual sales speed, lead time, and a sane cover target. Fix it by calculating order quantity from your real daily sales rate and your supplier's lead time, then subtracting what you already have on hand and on order.

Know your real sales rate, not your hopes

Use a recent, consistent sales window per variant, not a single big month or a gut guess. A slow mover and a fast mover need different order sizes even if they look similar on a shelf. If a product's sales rate is trending down, ordering based on an old average will overstock you every time.

Set a cover target instead of rounding up

Decide how many days of stock you actually want on hand after the next delivery arrives, based on lead time and how much buffer (safety days) you need for that supplier. Ordering "a bit extra just in case" with no number behind it is the most common cause of overstock. A cover target turns that gut feeling into a fixed number you can check your order against.

Always subtract what you already have and what's incoming

The biggest overstock mistake is ordering a full new batch while forgetting stock already on hand or a purchase order already in transit. Your order quantity should always be: what you need for the period ahead, minus what you already have and minus what's already coming.

Watch for case packs and minimums pushing you over

Supplier minimum order quantities and case pack sizes can force you to buy more than your formula says. When that happens, treat the overage as a known tradeoff, not a surprise, and factor it into how soon you reorder that SKU again.

Step by step

  1. Pull daily sales rate per variant from a recent, consistent sales window
  2. Confirm each supplier's lead time and add safety days for a buffer
  3. Set a target days-of-cover number for each SKU or product category
  4. Calculate order quantity as daily sales x (lead time + days of cover) minus (on hand + on order)
  5. Round up only to the nearest case pack or minimum order quantity, not further
  6. Recheck on-hand and on-order numbers right before placing the order, not days earlier
  7. Review slow movers regularly and lower their cover target or stop reordering them

Worked example

Suppose a variant sells 4 units a day on average, the supplier lead time is 10 days, and you want 14 days of cover after delivery. You currently have 20 units on hand and 10 units already on order. Order quantity = 4 x (10 + 14) - (20 + 10) = 96 - 30 = 66 units. If the supplier's case pack is 24, you would round up to 72, not to 96 or 120, to avoid tying up extra cash in stock you don't need yet.

How SteadyShelf helps

SteadyShelf calculates this order quantity for you automatically, using each variant's sales rate, each supplier's lead time and safety days, and your current on-hand and on-order stock, then rounds to case packs and minimums. It does not manage per-location stock levels, so if you stock the same SKU in multiple locations you still need to split and balance that manually.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

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FAQ

What if a supplier's minimum order quantity is much bigger than what I actually need?

Order the minimum but push out your next reorder date for that SKU to match the extra cover it gives you, so you don't double up too soon. Also consider whether that supplier is worth keeping for low-volume SKUs if their minimums consistently force overstock.

Should I use the same days-of-cover target for every product?

No. Fast-moving or seasonal items often need a shorter cover target to limit cash tied up in stock, while slow movers or products from unreliable suppliers may need a longer one as a buffer. Set the target per SKU or category based on how it actually behaves, not a single store-wide rule.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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