Inventory how-to

How to plan inventory for products with unreliable suppliers

Plan around the supplier's worst normal case, not their average case.

Short answer: Plan around the supplier's worst normal case, not their average case. Use a longer lead time estimate and more safety days for unreliable suppliers, which raises the reorder point and order quantity so you have a bigger buffer when a shipment runs late.

Track actual lead times, not quoted ones

Suppliers often quote a lead time that is optimistic. Keep a simple log of the date you placed each order and the date stock actually arrived. After a handful of orders you will have a real average and a real worst case, which is far more useful than the number on their price sheet.

Use the worst case, not the average, for safety days

For a reliable supplier you might use a small safety buffer. For an unreliable one, set safety days closer to the gap between their average and worst-case lead time. This pushes your reorder point earlier, so you are placing the order before you are at risk of running out.

Split risk across more than one supplier where you can

If a product can be sourced from two suppliers, use the unreliable one for part of the order and a more dependable one as backup, even at a slightly higher cost. For single-source products, carry extra cover stock instead, since you have no other lever to pull.

Reorder earlier and in smaller, more frequent batches if lead times vary a lot

If a supplier's lead time swings between 2 and 8 weeks, ordering huge quantities infrequently means you are exposed for long stretches. Smaller, more frequent orders placed earlier reduce how much damage one late shipment can do.

Step by step

  1. List every supplier and tag the unreliable ones based on your order history.
  2. For each unreliable supplier, record actual lead times from past orders, not their quoted times.
  3. Set lead time for planning purposes to your observed worst case, or close to it.
  4. Increase safety days for those SKUs so the reorder point moves earlier.
  5. Recalculate order quantity using the longer lead time plus safety days, factoring in stock on hand and on order.
  6. Where possible, qualify a second supplier for the same product to reduce single-source risk.
  7. Review the lead time log every few months and adjust safety days as patterns change.

Worked example

Say a product sells 4 units a day on average. The supplier quotes a 3-week (21-day) lead time, but your log shows shipments have taken as long as 35 days twice in the last six orders. You set planning lead time to 35 days and add 7 safety days, for a reorder point of 4 x (35 + 7) = 168 units. If you currently hold 60 units and have 0 on order, and you want 10 days of cover after the order arrives, order quantity = 4 x (35 + 10) - (60 + 0) = 180 - 60 = 120 units, rounded up to the supplier's case pack.

How SteadyShelf helps

SteadyShelf lets you set lead time and safety days per supplier, so you can enter the longer, real-world lead time for unreliable suppliers and it will move the order-by date and quantities accordingly. It does not track supplier on-time performance automatically or manage multiple suppliers per SKU, so you still need to log actual delivery dates yourself and decide when to split sourcing.

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

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FAQ

Should I just always add a lot of safety stock for every supplier to be safe?

No. Extra safety stock ties up cash and storage for products that do not need it. Reserve longer lead times and bigger safety buffers for suppliers you have actually seen be late, and keep reliable suppliers on tighter settings.

How often should I update the lead time I use for an unreliable supplier?

Review it every time you get a new data point, and formally reassess every few months. If a supplier's delays are getting worse or better, your planning lead time should move with that trend rather than stay fixed.

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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