Most stockouts in the hair trade are not caused by a supplier failing to ship. They are caused by reordering at the moment stock runs low, when the lead time already exceeds the remaining cover.
1. The Reorder Point Is a Lead-Time Question
Reorder point equals average daily demand multiplied by lead time, plus safety stock. The average daily demand figure is straightforward; the lead time figure is where distributors get it wrong, because handcrafted goods have a production lead time and a transit lead time that behave differently.
Measure lead time as the interval from purchase order to goods physically available for sale, then use the maximum observed lead time rather than the average. A supplier's stated lead time is a planning input, not a measurement.
2. Sizing Safety Stock Against Variability
Safety stock exists to absorb two variables: demand above forecast, and lead time above expectation. Where historical data exists, size it from the standard deviation of both; where a new SKU has no history, start with a cover expressed in weeks of expected sales and adjust after the first two cycles.
Do not apply one service level across the whole catalogue. The cost of a stockout on a signature length or shade is far higher than on a slow-moving variant, and holding buffer stock on everything is the fastest way to consume the margin that bulk buying earned.
3. ABC Segmentation Beats Uniform Rules
Rank SKUs by revenue contribution rather than unit volume. A small number of SKUs typically carry most of the turnover; those deserve tight review cycles and larger buffers, while the tail can be ordered to demand with longer acceptable waits.
4. Scheduled Release Instead of One Large Order
Where a factory will hold production and release against a schedule, the buyer can commit volume to earn tier pricing while taking delivery in instalments. This converts a working-capital problem into a logistics one, which is generally the cheaper trade.
5. Review Cadence
Recalculate reorder points monthly and after any lead-time surprise. A formula left untouched through a peak season is a formula that will fail in the following one.
