What is Can-order Point?
Can-order point is a method of placing orders when several items are purchased from the same vendor. This method is one level above the original order point. If one of the items in stock hits the must-order point, all things below the can-order point are ordered as well.
Significance of Can-order Points in E-commerce Logistics
Can-order point establishes business standards by maintaining a minimum order of stock before it runs out. The process is simple and easy to maintain because this method is utilized for purchasing from a single vendor. The following are the additional advantages of can-order points to consider:
- Customer satisfaction: Customers feel happy as the products don’t run out of stock and are available for purchase.
- Cost saving: Because all items are ordered together rather than individually, shipping costs are reduced.
- Profits: Because all products in stock are available for purchase to customers due to the can-order point policy, it generates more profits.
Pre-requisites of Can-order Point and How It Works
For each product in the same vendor’s inventory, a can-order point, order point, and must-order point are created. If a product reaches the must-order point, the seller orders all products below the can-order point from the same vendor to save on shipping costs. Below mentioned are the prerequisites of a can-order point:
- Same or single vendor: Can-order point can only be created for the products from the same or single vendor.
- Multiple products: Best suited for keeping various products in stock.
Use Case With Can-order Point
Consider an e-commerce company that purchased three products, A, B, and C, of 20 No’s each from a single vendor. They also set the must-order and can-order point levels to 3 and 6 No’s, respectively. Now in stock, they are in the following quantities: A=3, B =5, and C =9 No’s. Because product-A has reached the must-order point, both products A and B must be ordered together because they are below the can-order point.