Best Practices: How and why to use the Break Pack Threshold $ setting

The Break Pack Threshold $ setting is part of Paladin’s Market-Driven Inventory™ system that uses sophisticated sales analysis to minimize wasted overstock dollars. When you order more items than you can sell, you tie up your money in overstock. If this money were available, you could use it to improve your business in other ways.

Unlike many other ordering systems, Paladin’s smart ordering system does not simply replace items on your shelves. Instead, it constantly monitors and analyzes the sale history for every item and makes intelligent purchases for your store.

How the Break Pack Threshold $ setting saves you money

The Break Pack Threshold $ sets the maximum price you will pay for a supplier’s case or shelf pack when it contains more items than you need. When the threshold is exceeded, and both the supplier and item support broken cartons, EDI processing will “break the carton,” and only order enough items to meet customer demand. Typically, this will set the item’s order quantity to one item.

The Break Pack Threshold $ value is specified for each EDI supplier individually in Paladin Configuration on the Suppliers tab.

Set the break pack threshold to a dollar amount that is small enough to not cause economic hardship to your store if you buy an entire case or shelf pack. If the field is blank or empty, we use the value of $10.

• Example: An EDI supplier sells an item in cases of 20 and supports broken cartons.
• In Paladin Configuration, on the Suppliers tab, the supplier has the following settings:
  • The EDI Supplier Services check box is selected, and an EDI system is chosen.
  • The Break Pack Threshold $ is set to $10.
• Your store has a demand for 10 items.

Scenario 1: A case of 20 items costs $25.

In this scenario, the store’s EDI ordering process will create a purchase order for 10 individual items because the cost of a case exceeds the $10 break pack threshold.

Scenario 2: A case of 20 items costs $8.

In this scenario, the store’s EDI ordering process will create a purchase order for a case of the item because the cost of the case is less than the $10 break pack threshold.

Myth: Buying in large quantities is always better; even when I buy more than I can sell because the cost per item is cheaper.

While it may seem like a better deal to buy items in larger quantities, if any of those items are not sold in short period of time, your money is tied up in non-performing assets. Although, you may incur a broken case charge when you purchase only what you need, in most cases, you will make more money when you invest the leftover dollars in items that you can sell.