You know your reorder point—the inventory level that signals it's time to order. You know your reorder quantity. But do you know the exact date you need to place that order to avoid a stockout? That's your place-by date, and missing it is one of the most common reasons brands run out of product.
The place-by date is the last possible day you can send a purchase order and still receive inventory before you run out. It accounts for your lead time, your current stock, and your expected demand. Get it right, and inventory flows smoothly. Get it wrong, and you're either scrambling to expedite orders or watching your shelves go empty.
Place-by Date Defined
Place-by date is the date by which a purchase order must be placed to ensure arrival before stockout, given current inventory levels, demand forecast, and supplier lead time.
It's different from your reorder point, which is an inventory level. Place-by date translates that level into a specific calendar date based on your current situation.
Think of it this way:
- Reorder point answers: "At what inventory level should I reorder?"
- Place-by date answers: "By what date do I need to have my order placed?"
For any given SKU at any given moment, there's a specific place-by date. If today's date passes that date without an order placed, you're at risk.
Calculating Your Place-by Date
The basic calculation works backward from when you'll run out:
Place-by Date = Stockout Date − Lead Time
And stockout date is calculated by:
Stockout Date = Today + (Current Inventory / Daily Demand)
A Worked Example
Say it's January 15th. You have 500 units in stock. You sell about 25 units per day, and your supplier needs 14 days from order to delivery.
First, calculate days until stockout:
500 units / 25 units per day = 20 days
So stockout date = January 15 + 20 days = February 4
Now subtract lead time:
February 4 − 14 days = January 21
Your place-by date is January 21. If you haven't placed an order by then, you're projected to stock out before the order arrives.
Why This Matters More Than You Think
Reorder Points Alone Aren't Enough
Reorder points tell you what to watch. Place-by dates tell you when to act. If you only monitor reorder points, you might notice inventory dropped below the threshold on January 18—but not realize you should have ordered three days earlier. Now you're playing catch-up.
Demand Isn't Always Steady
The simple calculation above assumes constant demand. But if you have a promotion starting February 1 that will double your sales rate, your place-by date moves up. Dynamic place-by dates account for known demand changes, giving you a more accurate picture.
Lead Times Vary
If your supplier sometimes takes 14 days and sometimes takes 21, which lead time do you use? Conservative planning uses the longer time, which moves your place-by date earlier. The cost of ordering a week early is usually less than the cost of a stockout.
How to Use Place-by Dates in Practice
Create a Place-by Date Dashboard
For your key SKUs, calculate and display the place-by date alongside current inventory and order status. Sort by date, soonest first. This immediately shows which products need orders now versus which can wait.
Set Alerts Based on Place-by Dates
Instead of (or in addition to) alerting when inventory hits a reorder point, alert when a place-by date is approaching. "Order needed by Friday" is more actionable than "Inventory below threshold."
Review Weekly at Minimum
Place-by dates shift as you sell inventory and as forecasts change. A weekly review catches products whose dates have moved up unexpectedly. For high-velocity items, daily review might make sense.
Factor in Order Processing Time
The place-by date assumes you can place an order instantly on that date. If your internal process takes two days from decision to PO, back up accordingly. Your "internal place-by date" might be two days before the external one.
Coordinate Across Products
If you order multiple SKUs from the same supplier, you might consolidate orders around the earliest place-by date in the group. Better to order some items a bit early than to pay for multiple shipments.
Handling Exceptions
Place-by Date Already Passed
If today's date is past the place-by date, you're already behind. Options include: expediting the order with faster shipping, finding a local backup supplier with shorter lead time, communicating proactively with sales about potential stockout, or accepting some days of stockout as unavoidable at this point.
Uncertain Demand Forecast
For new products or highly variable items, use conservative (higher) demand estimates when calculating place-by dates. Being cautious about ordering early beats being confident about stocking out.
Supplier Lead Time Changed
If a supplier notifies you of extended lead times, immediately recalculate all affected place-by dates. Some might now be in the past—triggering immediate action.
Common Mistakes to Avoid
- Confusing place-by date with delivery date. Place-by date is when you need to ORDER. It's earlier than when you need the product.
- Using average lead time instead of realistic lead time. For planning purposes, use a lead time you can reliably hit, not an optimistic average.
- Forgetting safety stock. The calculations above run to zero inventory. Factor in safety stock if you want to maintain a buffer.
- Not accounting for weekends and holidays. A place-by date that falls on a Saturday doesn't help if you can't order until Monday.
- Setting it and forgetting it. Place-by dates are dynamic. As inventory and demand change, so do the dates.
Key Takeaways
- Place-by date is the last day to place an order and receive it before stockout
- Calculate it by subtracting lead time from projected stockout date
- Place-by dates complement reorder points by adding urgency and timing
- Review regularly—dates shift as inventory sells and forecasts change
- Build in buffer time for internal order processing
Frequently Asked Questions
What is a place-by date?
A place-by date is the date by which you must place a purchase order to receive inventory before stocking out, given your current stock level, demand rate, and supplier lead time. It translates inventory levels into actionable calendar dates.
How do I calculate place-by date?
First, calculate your stockout date: Current Inventory / Daily Demand + Today's Date. Then subtract your lead time from the stockout date. The result is your place-by date. For example: 500 units / 25 units per day = 20 days until stockout. If lead time is 14 days, place-by date is in 6 days (20 - 14).
What's the difference between place-by date and reorder point?
A reorder point is an inventory level (e.g., 350 units). A place-by date is a specific calendar date. Reorder points tell you WHAT level triggers an order. Place-by dates tell you WHEN an order must be placed based on your current inventory and sales rate.
How often should I check place-by dates?
At minimum, weekly for all SKUs. For high-velocity products, check daily. Any time you see an unexpected demand spike or learn of lead time changes, recalculate immediately. Place-by dates are dynamic and need regular attention.
What if my place-by date is already past?
You're already at risk of stockout. Options include expediting the order (faster shipping), finding an alternate supplier with shorter lead time, reducing demand through marketing changes, or accepting some out-of-stock days. Act immediately—every additional day of delay increases stockout risk.