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How many Raw Materials should I order?
How many Raw Materials should I order?

Get a notification "To Buy" and "Best Order Date" on your Raw Materials based on demand coming from Finished Goods that require them

Anya Bacon avatar
Written by Anya Bacon
Updated yesterday

Efficiently managing your raw materials and ensuring their availability is crucial for any business. Prediko makes it easy by providing recommendations on how many raw materials you need to order and when to order them. These recommendations are based on your production needs, the Bill of Materials (BOM), and stock cover periods. Here's how to use Prediko for streamlined raw material management:

  1. Create Raw Materials on Prediko

    1. Start by setting up your raw materials in Prediko

  2. Add Bill of Material

    1. Ensure your finished goods are linked to the corresponding raw materials using a BOM.

  3. In Raw Material Catalogue you will see columns

    1. "To Buy (now)": How many units you should buy today to be at stock cover at your next potential delivery.

    2. "Health (now)": Based on Days Left today, what is the Health of the SKU.

    3. "Best Order Date": Deadline to purchase SKU to not be below Safety Stock at next potential delivery.

  4. "Create PO" for the Raw Materials

    1. Prediko automatically suggests the number of units to order based on demand. You can edit these recommendations as needed.

How do you calculate how much should I order ?

Prediko uses a structured approach to ensure your raw materials align with production needs:

  1. Analyze BOM: Identify all the finished goods that require the raw material.

  2. Determine Reorder Points: Check when finished goods will need raw materials for production.

  3. Calculate Demand: Sum the required raw materials during the stock cover period.

  4. Consider Lead Time: Ensure you place orders early enough to meet the stock cover demand.

Example Calculation:
Suppose raw material (RM1) is part of the BOM for two finished goods (FG1 and FG2). FG1 needs 500 units of RM1 for its production, and FG2 needs 250 units of RM1 for its production during the stock cover period of RM1. Prediko will recommend ordering 750 units to cover this demand. If there's existing stock, it will be deducted from this recommendation.

What if I already have negative stock in my Raw Material - do you increase the amount "To Buy" to ensure I can cover the negative stock?

If you have negative stock (e.g., due to a production order), Prediko will increase the "To Buy" amount to cover the deficit.
​Example: If RM1 has -300 units in stock and the demand is 750 units, Prediko will recommend ordering 1,050 units.

What if the reordering point appears during the Lead Time for the SKU? Will you take that demand into account?

If demand arises during the lead time (e.g., "selling when out of stock"), Prediko accounts for this in its recommendations.
​Example: If FG1 requires an additional 50 units during the lead time, Prediko will suggest ordering 800 units (750 + 50).

What Stock Cover and Safety Stock do you apply to Raw Materials?

It is based on your default settings in your settings page.

You can override it via columns "Days of Cover" or "Safety Stock" in the Raw Material Catalogue table.

What if I don't have Bills Of Material associated to this Raw Material?

If a raw material has no BOM associated with it:

  • "Best Order Date": Marked as N/A.

  • "To Buy": Set to 0.

  • Any stock >0 will appear as "Overstock" in the "Health" column.

My Raw Material is present in more than one Location - how do you know where to atrtibute Demand?

For raw materials stored across multiple locations, Prediko calculates the total demand. You can then split the recommended "To Buy" quantity as needed (via "Distribute by Location" on the PO) to ensure each location gets adequate stock for production.

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