Reorder point is the inventory level at which a replenishment order must be placed so that new stock arrives before existing stock is exhausted, calculated from average demand, supplier lead time and safety stock.
In trade practice
Procurement teams set reorder points in their warehouse management or ERP systems, linking them to supplier lead times that may extend significantly for Ukrainian or other non-EU origins. When actual stock falls to the reorder point, a purchase order is generated automatically or flagged for manual approval. Common errors include failing to update the calculation after a supplier changes lead time or after seasonal demand shifts, leaving safety stock margins inadequate.
In a specification
A supply agreement may require the buyer to maintain a defined minimum stock level and to place replenishment orders no later than the reorder point, with lead time assumptions stated explicitly in an annex.