One of the most difficult challenges in inventory management is determining how much stock you need to have available at all times to ensure you can provide your products quickly to customers. In attempting to solve this dilemma, inventory managers have devised multiple inventory management systems for keeping track of their stock. Many of these use the concept of “par levels” to keep track of stock numbers.

What is a Par Level?

A par level, as the name implies, is an inventory management method through which you determine the minimum amount of stock that you always need to have on hand. When stock numbers drop below the par level, you know that ordering more of that particular item of stock is imperative else you may find yourself failing to fulfill customer orders.

In the majority of cases, managers will aim to order the minimum amount of stock to bring an item back to, or just above, its par level and a range of factors go into determining what the level is for each item. Everything from how much the item sells, how consumer demands are evolving, and how long it takes to order new stock will play a role in determining the par level.

Setting a par level brings much-needed structure to the ordering process and even allows inventory managers to delegate the ordering of certain stock items to others where needed.

Making the Key Decisions

Creating a par level often requires extensive stock and market research, allowing managers to make decisions that don’t result in them over or under-ordering stock. The advent of mobile inventory app technology has made this process simpler, as managers can keep track of stock levels on the go and even dig into analytics data relating to each item

The key issue to remember is that a par level will not always stay stable over time. For example, the data provided by a sales forecast app may show that future demand for an item will change, which requires adjustments to the par level to successfully manage the item’s inventory levels. As such, managers should make it a point to check their par levels multiple times per year to ensure the levels are still relevant to the current market conditions.