Ordering5 min read

How to set par levels so you stop running out

A par level is the amount of something you want on the shelf when the delivery arrives. Set them properly and ordering stops being a judgement call every week — it becomes subtraction.

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What a par level actually is

It is the level you top back up to, not the level at which you panic. When you order, you count what is there and order the difference between that and the par. Nothing to remember and nothing to estimate.

The point is that it moves the thinking to a quiet moment — once, when you set the number — instead of doing it under pressure every time an order is due.

Working one out

Take how much you get through between deliveries, then add enough on top to survive being wrong. Both halves matter and the second is the one people leave out.

  • Usage between deliveries: how much you went through last cycle, not how much you think you go through. Two stocktakes either side of a week answer this exactly.
  • Buffer: enough for a busier-than-expected run or a late truck. A quarter to a half of the usage figure is a sensible starting point — you will correct it within a month.
  • Round to how it is sold. A par of 3.5 cartons is not orderable; a par of 4 is.

The two failure modes

Par levels go wrong in exactly two directions, and they cost you in different currencies.

Set too lowSet too high
You 86 items mid-serviceCash sits on a shelf instead of in the bank
Emergency top-up runs at retail pricesMore stock reaching its date before it sells
Staff improvise substitutionsMore to count at every stocktake
Customers meet the shortage, not youStorage you do not have gets used anyway

Set them seasonally, not once

A par level set in February is a February number. December in hospitality is not the same trade, and neither is the first cold week of winter for a place that sells a lot of cold drinks.

Revisit the fast-moving lines each season and leave the slow ones alone. Twenty items usually cover most of what you spend; those are the ones worth the attention.

Start with the things that hurt

Do not sit down to set pars for four hundred items — you will not finish, and the list you abandon halfway is worse than no list.

Start with the ten things you have run out of in the last three months. That list is short, you already know what is on it, and it is where the pain is. Add to it when something new catches you out.

Or let Everyday Ordering do it

Build the list once, grouped by the supplier who brings each thing, then walk the room marking what is low. You pick the supplier and confirm before anything sends — or print it and phone the order through instead.

Questions

What is a par level?
The quantity of an item you want on hand after a delivery. When you order, you count what is left and order the difference between that and the par, so the decision is subtraction rather than judgement.
How do I calculate a par level?
Take your usage between deliveries and add a buffer for a busy run or a late delivery — a quarter to a half of the usage figure is a reasonable start. Then round up to the unit your supplier actually sells.
How often should par levels be reviewed?
Seasonally for the fast movers, and any time something runs out unexpectedly. A par level set once and never revisited slowly stops describing how you trade.
How many items should I set par levels for?
Start with the ten things you have run out of in the last three months rather than trying to cover everything. A short list you finish beats a long one you abandon, and those ten are where the pain already is.