The verdict in three sentences
An unanticipated stockout costs twice: the lost sale and the customer who defects to a competitor, sometimes for good. The fix isn't to overstock (frozen cash) but to compute a reorder point from supplier lead time and a safety stock. Automatic alerts at the minimum threshold turn stressful reactive management into calm, quantified anticipation.
Manual tracking or automatic alerts
Eyeballing stock or counting at month-end guarantees stockouts. Automatic alerts change the game from a few dozen SKUs onward.
| Criterion | Manual tracking | Automatic alerts |
|---|---|---|
| Check frequency | Weekly or monthly | Real time |
| Detection before stockout | Rare, often too late | Systematic at threshold |
| Observed stockout rate | 8 - 15 % of SKUs | 2 - 4 % |
| Lost sales/month | High | Low |
| Overstock (frozen cash) | Frequent (over-safety) | Optimized |
| Management time/week | 3 - 5 h | 30 - 60 min |
Automatic alerts don't remove reordering, they trigger it at the right time, neither too early (overstock) nor too late (stockout).
Computing the reorder point
The reorder point is the stock level that must trigger the supplier order. Simple formula: (average daily sales × supplier lead time) + safety stock. Here are 2026 examples.
| Product | Sales/day | Supplier lead time | Safety stock | Reorder point |
|---|---|---|---|---|
| Best-seller t-shirt | 8 | 7 days | 20 | 76 units |
| Handbag | 3 | 14 days | 10 | 52 units |
| Earbuds | 12 | 5 days | 25 | 85 units |
| Cosmetic product | 5 | 10 days | 15 | 65 units |
| Seasonal item | 6 | 21 days | 30 | 156 units |
| Fast-moving grocery | 20 | 3 days | 40 | 100 units |
Safety stock covers sales spikes and supplier delays. The longer the lead time and the more irregular the demand, the higher it must be.
Mini case study
Ousmane sells earbuds online in Dakar, 12 sales/day, margin 4,000 FCFA/unit, 5-day supplier lead time. Without alerts, he runs out about 4 days a month on this SKU, i.e. 48 lost sales: 48 x 4,000 = 192,000 FCFA of margin gone per month. He sets a reorder point at 85 units with an automatic alert. Stockouts drop to under a day per month, i.e. about 12 lost sales at worst: 12 x 4,000 = 48,000 FCFA. Recovered margin: 144,000 FCFA/month on a single SKU, without overstocking.
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FAQ
How do I set my safety stock?
Base it on sales variability and supplier reliability. For stable demand and a punctual supplier, a few days of sales is enough. For a long or irregular lead time, go up to 1-2 weeks of sales.
What's the reorder point formula?
(Average daily sales × supplier lead time in days) + safety stock. This formula triggers the order exactly when needed. Recompute it if your sales or lead times change significantly.
Is overstock as much a problem as a stockout?
Yes. Overstock ties up your cash and raises the risk of unsold goods, especially for seasonal or perishable products. The right level avoids stockouts without needlessly freezing cash.
At how many SKUs does automation become essential?
From 30 to 50 active SKUs, manual tracking gets risky. Automatic alerts bring the stockout rate from 8-15 % to 2-4 % while cutting management time fivefold.
How do I handle seasonal products?
Anticipate with a higher safety stock and a reorder point computed on the often longer supplier lead time. Also plan a stock exit (promo) to avoid unsold goods at season's end.
Let's talk about your project. We build alert thresholds and automatic reorder calculation into your store so you never miss a sale again. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
