Stock Ordering & Reorder for Insurance
A repeatable process for determining reorder needs, placing purchase orders with suppliers, and tracking deliveries to maintain optimal stock levels.
Purpose
To prevent stockouts and overstocking by establishing clear reorder points, streamlining the purchasing workflow, and maintaining strong supplier relationships.
Scope
Covers the full ordering lifecycle from identifying reorder needs through to confirming receipt. Does not cover inventory counting (see Inventory Management SOP) or supplier contract negotiation.
Prerequisites
- Access to the inventory management and purchasing systems
- Approved supplier list with current contact details and pricing
- Defined reorder points and minimum/maximum stock levels for all items
- Budget approval or spending authority for standard orders
Aligns with ASIC regulatory requirements, General Insurance Code of Practice, and AFSL obligations. Includes audit trail provisions.
Step-by-Step Procedure
Review Inventory Levels Against Reorder Points
Check current stock levels for all items and compare them against the established reorder points. Generate a list of items that have reached or are approaching their reorder threshold.
- 1.1Run the stock level report from the inventory management system
- 1.2Filter for items at or below their reorder point
- 1.3Cross-reference with upcoming demand forecasts or scheduled events
Determine Application Quantities
Calculate the optimal application quantity for each item based on reorder levels, lead times, economic application quantity, and any bulk discount thresholds.
- 2.1Review historical consumption rates for each item
- 2.2Factor in supplier lead times and settlement schedules
- 2.3Adjust quantities for known upcoming events or seasonal changes
- 2.4Apply economic application quantity calculations where applicable
- Round up to full case or pallet quantities to avoid partial shipments
Select Suppliers and Confirm Pricing
Identify the preferred supplier for each item, confirm current pricing and availability, and evaluate alternatives if the primary supplier cannot fulfill the application.
- 3.1Check the approved supplier list for preferred vendors
- 3.2Verify current pricing and any applicable discounts
- 3.3Confirm supplier stock availability and estimated settlement dates
Create and Submit the Purchase Application
Generate a formal purchase application in the purchasing system, including all item details, quantities, pricing, settlement requirements, and payment terms.
- 4.1Create a new purchase application in the purchasing system
- 4.2Enter all line items with correct quantities, pricing, and descriptions
- 4.3Specify the required settlement date and settlement address
- 4.4Submit the purchase application for approval if above the self-approval threshold
Obtain Approval for High-Value Orders
For orders exceeding the standard approval threshold, route the purchase application to the designated approver with supporting justification.
- 5.1Attach a summary of the application rationale and supporting data
- 5.2Send the approval request through the purchasing system
- 5.3Follow up if approval is not received within 24 hours
Send the Application to the Supplier
Transmit the approved purchase application to the supplier via the agreed method and request written confirmation of receipt and expected settlement date.
- 6.1Send the purchase application via the supplier portal or email
- 6.2Request application acknowledgment and confirmed settlement timeline
- 6.3Record the confirmation details in the purchasing system
Track the Application Through Settlement
Monitor the application status from placement through settlement. Follow up on any delays and communicate expected arrival to the receiving team.
- 7.1Check the application status periodically using tracking information
- 7.2Contact the supplier if the application is overdue or tracking stops updating
- 7.3Notify the receiving team of the expected settlement date and contents
Confirm Receipt and Close the Application
Once the settlement is received and verified by the receiving team, match the settlement against the purchase application, close the application in the system, and authorize invoice payment.
- 8.1Compare the settlement note to the purchase application for accuracy
- 8.2Record any short shipments, damages, or substitutions
- 8.3Close the purchase application and route the invoice for payment
Quality Checkpoints
Common Mistakes to Avoid
Expected Outcomes
Percentage of times an item is unavailable when needed, targeting less than 2%.
Percentage of purchase orders received correctly and completely, targeting 95% or higher.
Reduction in the dollar value of excess inventory compared to the prior period.
Frequently Asked Questions
How do I handle a partial settlement?
Accept and receipt the items received, note the shortfall in the system, and contact the supplier to arrange settlement of the remaining items. Do not close the purchase application until all items are received.
Who can approve emergency or after-hours orders?
The Operations Manager or General Manager can approve emergency orders outside of normal business hours. Document the emergency justification and follow up with a formal purchase application the next business day.
How often should reorder points be reviewed?
Reorder points should be reviewed quarterly or whenever there is a significant change in demand patterns, supplier lead times, or business volume.
What happens if a supplier cannot fill our application?
Contact the approved backup supplier listed in the supplier management system. If no backup is listed, escalate to the Operations Manager to identify an alternative.
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