What is the difference?
A reorder-point policy compares an inventory position with a threshold. Supply netting compares requirements with available stock and planned receipts, usually across dated periods. The first can provide a simple replenishment trigger. The second helps explain when a shortage occurs and how much additional supply is needed.
They can coexist. A stable stocked item may use a reorder policy while a constrained or seasonal item receives a time-phased review. Neither method fixes inaccurate records or an unreliable receipt date.
A simple supply-netting example
The following numbers are illustrative, for one item and one period. Assume there are no other requirements or receipts.
| Input | Units | Meaning |
|---|---|---|
| On-hand inventory | 300 | Physical quantity recorded |
| Reserved inventory | 80 | Committed elsewhere |
| Blocked inventory | 20 | Not usable for this plan |
| Usable opening stock | 200 | 300 minus 80 minus 20 |
| Confirmed receipt in period | 150 | Expected to arrive in time |
| Demand in period | 420 | Requirement being planned |
| Desired closing buffer | 50 | Explicit policy assumption |
Additional supply required is 420 + 50 − 200 − 150 = 120 units. If purchases must be in multiples of 50, an unconstrained order recommendation rounds up to 150 units. That leaves 80 units after demand, assuming every receipt arrives as expected.
The timing matters. If the 150-unit receipt arrives after the demand date, treating it as available for the entire period hides an earlier shortage. Review shorter buckets or exact dates where this changes the decision.
How does a reorder point work?
A simple policy sets a trigger equal to expected lead-time demand plus safety stock. If expected demand during lead time is 180 units and the chosen safety stock is 40, the reorder point is 220 units. Compare the appropriate inventory position with that trigger; define whether it includes outstanding orders and backorders.
The trigger does not by itself determine the order quantity. Fixed order quantities, order-up-to levels, minimum order quantities, and supplier constraints are separate policy choices. Safety stock also requires assumptions about variability and the service objective; a convenient round number is not evidence of an optimal policy.
Which approach should your team use?
| Situation | Useful starting point | Watch for |
|---|---|---|
| Stable demand and simple replenishment | Reorder-point review | Lead-time drift and stale thresholds |
| Dated customer demand and multiple receipts | Time-phased netting | Late receipts and double-counted supply |
| Seasonal build or promotion | Scenario-based netting | Demand assumptions and excess after the event |
| Shared constrained component | Cross-item supply review | Competing allocations and priority rules |
Evaluate the workflow using actual exceptions. Ask who can change a receipt date, who approves an allocation, and how the effect becomes visible downstream.
GrepEye Supply Chain connects inventory and supply planning with demand review. Use the pilot checklist to prepare inputs, and the integration checklist to define how an approved recommendation reaches your ERP.