Procurement Methods for Consumables in Crafts: Terminology, Examples and Decision Support (2025)

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TL;DR – The Most Important in 60 Seconds

Procurement methods regulate who triggers replenishment when and how, without constant thinking or stockout chaos. German craft businesses lose an average of four to seven hours per week due to unorganized material procurement. The right method depends on your business size, consumption profile and warehouse discipline. For small businesses (one to five employees), consolidated ordering with fixed ordering rhythm is often sufficient. Medium-sized businesses (five to 30 employees) benefit from reorder point or Min/Max methods for standard items plus Kanban for high-frequency C-parts. Larger businesses combine several methods and outsource standard ranges to suppliers (VMI). Start with your top-30 consumable items, define clear responsibilities and check after four weeks what works. The article explains all nine relevant methods, typical sources of error and gives you a practical setup without IT projects.

Why Procurement Methods Decide Between Profit or Chaos

Consumables rarely eat into the budget in craft businesses. They eat time, nerves, construction site flow and ultimately margin, because someone spontaneously drives off, orders express delivery or improvises.

A systematic procurement method is the rulebook that determines who triggers replenishment when and how, without someone constantly having to think, ask or organize stockouts. Businesses without clear methods lose an average of four to seven hours per week due to material shortages, express deliveries and multiple orders from different suppliers.

When craftsmen talk about "ordering", they often mean three different things:

• Demand arises (material is withdrawn or running low)
• Procurement is triggered (someone reports, plans or orders)
• Replenishment arrives (delivery to warehouse or directly to construction site)

Procurement methods differ exactly in this:

1. Who triggers the order when and how
2. with which rulebook and
3. with which control.

This article organizes common procurement methods and the most important terminology so you can cleanly decide which procedure suits your business. You get a glossary of terms commonly used in the market, an overview of the most important methods, decision support with typical use cases and typical sources of error from practice.

The Vocabulary: Terminology You Should Know

A clear method requires that all participants speak the same language. These technical terms regularly appear in specialist discussions with suppliers, in merchandise management systems and in procurement planning.

• Consumables / Consumption Goods
  Material that is regularly consumed and does not remain permanently in the business (Examples: Screws, dowels, cable ties, gloves, abrasives, terminals).
• C-Parts / C-Items (ABC Analysis)
  Items with low unit value, high quantity and high process effort. ABC analysis divides materials by value: A-parts are valuable but rare, B-parts are middle class, C-parts are cheap but numerous. Process optimization pays off most for C-parts precisely because the effort for ordering and administration often exceeds the merchandise value.
• MRO (Maintenance, Repair, Operations)
  Procurement category for maintenance and operating supplies. In crafts, MRO often coincides with consumables plus workshop requirements (spare parts, aids, cleaning materials).
• PU / Packaging Unit
  Ordering and delivery logic: Ordered in packages or cartons, consumed in pieces or meters. Common source of error when pieces are managed in the system, but supplier only offers bundles of 100 pieces.
• Dispo / Disposition
  Planning and control of when and how reordering occurs (manual or automatic). The term comes from logistics and describes demand-oriented material planning.
• Purchase Suggestion / Planned Order\ System suggests a purchase; a human approves or adjusts. This semi-automatic variant combines system logic with human control.
• Reorder Point / Order Point
  Threshold value: When stock falls below this value, reordering is triggered. The reorder point takes Lead time and safety stock into account.
• Safety Stock
  Buffer for unexpected demand peaks or delivery delays. Prevents stockouts, but ties up capital.
• Lead Time / Replenishment Lead Time
  Time between order and goods receipt. Critical factor for all rule-based methods because the reorder point must bridge the lead time.
• Purchase Requisition (PR)
  BANF stands for Purchase Requisition (term from SAP). Employees report internal requirements, central purchasing function bundles and orders.
• Consignment Warehouse
  Goods are stored with the customer (in your warehouse), but belong to the supplier until withdrawal. You only pay for withdrawn material. Reduces capital commitment, but increases dependency.
• VMI (Vendor Managed Inventory)
  Supplier takes stock responsibility: They check your stocks regularly and replenish independently. Relief for you, loss of control over assortment and prices.
• Framework Agreement / Contract
  Agreement on conditions (prices, discounts, Lead times) without specific quantities. Individual orders then occur via call-off orders under the agreed conditions.
• Call-off Order / Call-off
  Individual order based on framework agreement. Quantities flexible, prices fixed.

Procurement Methods at a Glance

Procurement methods can be organized along two axes:

1. Manual versus rule-based as well
2. Customer- versus supplier-controlled.

Depending on business size, consumption profile and team discipline, a different combination fits.

Practice shows nine methods that are actually used in German businesses:

1. Manual Individual Ordering (ad-hoc, Spot Buying)
2. Purchase Requisition (PR) (central ordering point)
3. Consolidated Ordering (Periodic Review) (fixed order times)
4. Reorder Point Method (Continuous Review) (Reorder Point)
5. Min/Max Method (Fill up to target stock)
6. Kanban (two‑bin system, e‑Kanban)
7. VMI / Vendor Shelf‑Replenishment / Consignment (supplier-controlled)
8. Framework Agreement + Call-off (Contract + Call-off)
9. Project Procurement vs. Warehouse Procurement (Strategy Decision)

None of these methods is "the best". The suitable method depends on how many items you manage, how predictable your consumption is, how reliable your suppliers deliver and how disciplined your team documents warehouse movements.

The 9 Most Important Methods in Detail

1) Manual Individual Ordering

What is manual individual ordering? Material is missing, someone orders spontaneously by phone, email or online shop without an overarching system or rulebook.

Technical terms: Individual order, demand order, free text order, Spot Buying

How it works:
Employee notices material shortage, calls supplier or orders in shop. No prior planning, no systematic bundling, no control over order quantities or delivery dates.

Well suited for:
Rare items, special parts, irregular demand, very small businesses with fewer than five employees and low material turnover. If you place fewer than ten orders per month, this method is often sufficient.

Typical problems:

• Many small orders drive process costs (time, shipping costs, invoice processing)
• Wrong orders due to incorrect PU (packaging units) or item mix-ups
• "Emergency trips" and express costs to wholesalers or hardware stores become normal because no one has an overview of stocks
• No bundling leads to worse purchasing conditions

Signal that you've outgrown it:
When the question "Who orders that?" comes up more often than "What do we need?", a rulebook is overdue.

2) Purchase Requisition (PR)

What is requirement reporting? Employees report internal requirements to a central purchasing function that bundles orders and releases them.

Technical terms: Requirement report, material requisition, BANF (Purchase Requisition, SAP term), goods issue note

How it works:
Warehouse manager, journeyman or fitter reports missing items (list, app, Excel). Office, boss or purchasing collects these reports, bundles them by supplier and places consolidated orders.

Well suited for:
Businesses with 5 to 20 employees who want order and control over procurement without releasing every little thing. Works well when one person is centrally responsible for purchasing.

Advantages:

• Clear responsibility (who orders when)
• Less chaos through bundling of related items
• Better negotiating position through larger order quantities

Disadvantages:

• Dependency on discipline: If reports pile up or arrive too late, the construction site still stops
• No automation: Someone has to manually collect, check, release

Practical tip:
Requirement reporting only works if "reporting" requires less effort than "quickly fetching yourself". Digital forms or scan apps significantly lower the threshold compared to paper slips.

3) Consolidated Ordering (Periodic Review)

What is consolidated ordering? There are fixed order times (for example daily at 5:00 PM or every Friday) when all accumulated requirements are ordered together.

Technical terms: Consolidated order, order rhythm, periodic review, order window, cyclical procurement

How it works:
All requirements are collected until the next order time. At 5:00 PM it is checked: What has fallen below reorder point, what has been reported? A consolidated order goes out.

Well suited for:
Consumables with plannable basic noise when you want to reduce ordering effort without investing in automation. Particularly useful with suppliers who have minimum order values or shipping cost tiers.

Advantages:

• Fewer orders means less process costs
• Better bundling leads to better conditions
• Reduces shipping costs through larger deliveries

Disadvantages:

• Risk of stockouts between cycles if safety stocks are missing
• Longer period between demand detection and delivery
• Requires buffer (safety stock), otherwise stress just shifts

Practical tip:
Periodic review needs a minimum buffer. If you order daily, a safety stock for two days is often sufficient. With weekly ordering, you need at least ten days buffer.

4) Reorder Point Method (Continuous Review)

What is the reorder point method? When an item's stock falls to or below the reorder point, reordering is triggered automatically or as a proposal.

Technical terms: Reorder point, reorder point method, Reorder Point (ROP), purchase suggestion, continuous review policy

How it works:
A reorder point is defined for each item (for example 50 pieces). As soon as withdrawals bring the stock to 50 or below, the system triggers an order (automatic) or creates a purchase suggestion (semi-automatic for approval).

Well suited for:
Items with regular, reasonably predictable consumption when stocks are managed digitally or can be reliably estimated. Works particularly well for B- and C-parts with medium to high turnover frequency.

Advantages:

• Easy to understand and implement
• Stable in daily life, little manual intervention required
• Reacts event-based to actual consumption

Disadvantages:

• Stands and falls with clean master data: correct reorder points, accurate Lead times, clean units
• Does not react to demand fluctuations (seasonal peaks, major projects)
• Requires disciplined stock management

Typical error:
Reorder point is set "by gut feeling" and never adjusted. Correct calculation: Reorder point = (average daily usage × lead time in days) + safety stock.

Example:
An electrical business consumes an average of 20 WAGO 221-412 terminals per day. Lead time is three days. Safety stock 40 pieces (two days buffer). Reorder point = (20 × 3) + 40 = 100 pieces. As soon as stock drops to 100, reordering is triggered.

5) Min/Max Method (Fill up to Target Stock)

What is the Min/Max method? When stock falls below a minimum stock (Min), it is replenished up to the maximum stock (Max).

Technical terms: Min/Max, Order-up-to-Level, automatic disposition, replenishment logic, (s, S) policy (replenish to S when on-hand falls below s)

How it works:
Two values are defined for each item: Minimum stock (Min) and maximum stock (Max). As soon as stock falls below Min, enough is automatically reordered so that Max is reached again after delivery.

Well suited for:
C-parts and standard items with regular consumption when you want "always enough in stock" without calculating quantities anew each time. Ideal for businesses that have storage space and see capital commitment as less critical than delivery reliability.

Advantages:

• Very little thinking in daily life (system largely regulates itself)
• High delivery capability because Max stock serves as buffer
• Easy to understand for all participants

Disadvantages:

• Wrong Max leads to overstock, dead capital and space problems
• No reaction to seasonal fluctuations
• Ties up more capital than more demand-accurate methods

Practical tip:
Don't define Max as "what would be nice" but as realistic range (two to six weeks per item, depending on lead time and consumption stability). Example: If you consume 100 dowels per week and lead time is two weeks, Min could be 200 (two weeks) and Max 600 (six weeks).

You want to know exactly how Min/Max works and how to integrate, apply and live it? Then feel free to continue reading in the following blog Read the Min/Max practical guide →

6) Kanban (Two‑Bin) / e‑Kanban

What is Kanban? A signaling system where container 1 is consumed while container 2 serves as buffer. When container 1 is empty, replenishment is triggered.

Technical terms: Kanban (Japanese: Card/Signal), Two‑Bin Kanban, Kanban card, e‑Kanban (electronic Kanban), Pull system

How it works:
Two identical containers are ready for each item. Container 1 stands at the front and is withdrawn from. Container 2 stands behind as reserve. When container 1 is empty, the Kanban card is turned over (or scanned with e‑Kanban), which triggers reordering. Container 2 moves to the front, container 1 is replenished and placed at the back.

Well suited for:
High-frequency C-parts (screws, dowels, terminals, cable ties) with stable consumption when you want to simplify warehouse discipline and have physical space for double containers.

Advantages:

• Extremely robust, "foolproof" in a positive sense
• No counting or weighing required
• Visually immediately recognizable (empty container = signal)
• Self-regulating: Faster consumption leads to faster reordering

Disadvantages:

• Setup effort (procure containers, set up locations, define container sizes, initial stocking)
• Needs space (double containers for each item)
• Digital (e‑Kanban) does not automatically solve process design (container logic must still be clean)

Practical tip:
Kanban is not a tool. It is a signal process. Digitalizing without clean container logic brings little. Container size should correspond to about two to four weeks consumption, depending on Lead time.

Example:
An installation business consumes 200 cable ties per week. Lead time is one week. Container size = 400 pieces (two weeks). As soon as container 1 is empty (Kanban signal), container 2 with 400 pieces remains. Until replenishment arrives (one week), 400 pieces easily cover two weeks of consumption.

7) Supplier-Controlled: VMI / Vendor Shelf‑Replenishment / Consignment

What is supplier-controlled procurement? The supplier takes responsibility for stock control and replenishment. With consignment, goods remain the property of the supplier until withdrawal.

Technical terms: VMI (Vendor Managed Inventory), Vendor Shelf‑Replenishment, supplier shelf, consignment warehouse, CMI (Customer Managed Inventory as counterpart)

How it works:
The supplier checks your stocks regularly (weekly or according to agreed rhythm) on site or via digital interface. They replenish independently. With consignment, you only pay for withdrawn material, not for warehouse stock.

Well suited for:
Businesses that want maximum internal relief and accept clear supplier lock-in. Particularly widespread with screw wholesalers, PPE and abrasives.

Advantages:

• Minimal internal effort (no counting, ordering, disposing)
• Reduced capital commitment with consignment
• Supplier optimizes range and stocks themselves

Disadvantages:

• Strong dependency / Lock-in (range, price logic, transparency)
• When data or agreements are poor, responsibility disappears into a gray area ("thought you were doing that")
• Less flexibility when changing suppliers
• Often more expensive per item than self-procurement

Practical tip:
VMI needs clear Service-Level Agreements: Visit frequency, minimum stocks, complaint logic, price adjustment rules, cancellation periods. Without written agreement, VMI becomes a black box problem.

8) Framework Agreement + Call-off

What is framework agreement plus call-off? Conditions (prices, discounts, Lead times) are fixed in the framework agreement. Individual orders occur via call-off orders with flexible quantities.

Technical terms: Framework agreement, contract, condition agreement, call-off order, Call-off, Blanket Order

How it works:
You negotiate a framework agreement with a supplier: "The following prices apply for the following items for one year." When you need material, you place call-off orders: "According to framework agreement No. 12345, please deliver 500 pieces of item XYZ."

Well suited for:
Recurring items with stable supplier and plannable annual volume. Particularly useful for standard ranges (cables, pipes, connectors) that are regularly needed in varying quantities.

Advantages:

• Price and process stability (no renegotiation with each order)
• Faster order processing (conditions are fixed)
• Quantity discounts through agreed annual volumes

Disadvantages:

• Works poorly when assortment changes frequently
• Binds you to a supplier for the contract period (change more difficult)
• If you don't reach agreed volumes, retroactive calculations threaten

Practical tip:
Framework agreements pay off from about 20,000 euros annual volume per supplier. Below that, administrative effort outweighs the benefit. Negotiate flexible minimum purchase quantities or waive them entirely if consumption fluctuates.

9) Project Procurement vs. Warehouse Procurement (Strategy Decision)

What is the difference between project procurement and warehouse procurement? You decide per material:

1. Is it delivered to the warehouse (warehouse procurement) or
2. directly to the construction site (project procurement, direct delivery)?

Technical terms: Construction site delivery, direct delivery, project procurement, stock procurement, consignment on construction site

How it works:
With warehouse procurement, you order standard material to the warehouse, from where employees withdraw it for various construction sites. With project procurement, you order project-specific material directly to the construction site, it never goes to the central warehouse.

Rule of thumb:

• Standard consumables = Warehouse logic (Reorder point/MinMax/Kanban): Screws, dowels, terminals, gloves, abrasives
• Project/object-specific = Direct delivery / Project procurement: Special productions, large quantities for a project, customer-specific items

Typical error:
Have everything delivered directly. Then every construction site becomes a mini-warehouse with shadow stocks (material lies in vans, containers, is moved between construction sites). You lose overview and pay shipping costs multiple times.

Practical tip:
Distinguish clearly:

1. What do you need across the board (to the warehouse)?
2. What is project-specific (directly to construction site)?

Hybrid models work: Standard material to warehouse, special parts directly.

Decision Support: Which Method Suits Your Business?

The "best" procurement method doesn't exist. There is only the method that fits your daily life: Team size, consumption profile, supplier reliability, warehouse discipline.

When you…

1. … have few items and rarely have stockouts:\ → Consolidated ordering (periodic review)\ You collect requirements until the fixed order date (daily or weekly) and place a consolidated order. Simple, saves process costs, works without IT.
2. … have frequent C-parts and chaos when replenishing:\ → Kanban (two‑bin) or VMI/vendor shelf‑replenishment\ Kanban if you want to control the process yourself. VMI if you seek maximum relief and accept supplier lock‑in.
3. … know on‑hand roughly and want a rulebook:\ → Reorder point or Min/Max\ Reorder point for finer control (reacts to consumption), Min/Max for simpler logic (always fills up to Max).
4. … simply want "fill up to full":\ → Min/Max\ Little mental work, high delivery reliability, but needs space and ties up capital.
5. … want to outsource maximally and supplier lock‑in is OK:\ → VMI/vendor shelf‑replenishment\ Supplier takes care of everything. You pay per withdrawal or fixed per month.
6. … have volume and stability:\ → Framework agreement + call‑off\ Conditions fixed, orders flexible. Pays off from about 20,000 euros annual volume per supplier.
7. … constantly have special parts:\ → Individual ordering (spot buying), but consciously as exception\ For real special parts, manual ordering is correct. But standard C-parts belong in one of the other methods.

Decision matrix by business size:

Typical Sources of Error and How to Avoid Them

Even with the right method, businesses often fail due to avoidable detail errors. These sources of error come up again and again in practical projects with craft businesses.

1. Unit Chaos (Pieces vs. PU)
   Ordered in packages (PU), consumed in pieces. Without clear rule, every disposition escalates. Example: Reorder point is set to 50, you order 50, supplier delivers 50 packages of 100 pieces each. Suddenly you have 5,000 pieces instead of expected 50.

   Solution:
   Define for each item a storage unit (usually pieces) and an ordering unit (PU). System must know both and convert. If PU = 100 pieces and reorder point = 50 pieces, system orders 1 PU (not 50 PU).

2. No Responsibility
   When "everyone can report" but "no one has to order", a black hole emerges. Requirement reports pile up, no one feels responsible, construction site waits.

   Solution:
   One person is responsible for disposition and release. Must not be diffuse ("team takes care"). Define name, role, deputy regulation.

3. Shadow Stocks
   Material lies in cars, construction site boxes, drawers, private "emergency supplies". Stock "in system" is then fantasy. Reorder points don't work because actually more is there, just not recorded.

   Solution:
   Define central storage locations, treat all others as consumption. Material that goes into car is consumed. Regular inventories (monthly for A-parts, quarterly for B-parts, annually for C-parts).

4. No Adjustment of Rules
   Reorder point/Min/Max is set once ("we've always done it this way") and never updated, although teams, construction sites, Lead times and suppliers change.

   Solution:
   Quarterly review of top-30 consumable items. Questions: Were there stockouts? Was there overstock? Has Lead time changed? Consumption increased/decreased? Sharpen rules.

5. Lead times Incorrectly Estimated
   Supplier promises two days, but often delivers five days. Your reorder point is calculated for two days Lead time. Stockouts are preprogrammed.

   Solution:
   Record realistic Lead times, not optimistic promises. Average of last ten deliveries is more realistic than catalog specification.

6. No Differentiation by Consumption Profile
   All items are treated equally although some are consumed daily, others monthly. Leads to massive overengineering or understeering.

   Solution:
   ABC-XYZ analysis:

   A-parts (valuable items) get more attention

   C-parts (low value) get simple methods (Kanban/Min/Max)

   X-items (constant consumption) fit reorder point and Min/Max

   Z-items (irregular) need manual control.

Practical Setup for Small Craft Businesses (Without IT Project)

Many businesses don't fail due to theory, but implementation. Here is a pragmatic roadmap for businesses that work with Excel or simple software and can't handle months-long IT projects.

Important: It can be helpful to limit yourself to one method to reduce complexity for employees. The best systems only work if they are actually lived. Decide at the beginning for one that is easy to introduce and test.

1. Define Top-30 Consumable Items
   List the 30 items that are constantly missing or frequently reordered. Not the most expensive, but the most annoying. These are usually screws, dowels, terminals, cables, gloves, abrasives.
2. Decide Method per Item
   For each of these 30 items:
   1. Kanban or Min/Max or reorder point?
      1. Rule of thumb: If withdrawn daily and delivery reliable, then Kanban.
      2. If withdrawn weekly and consumption fluctuates, then Min/Max.
      3. If rarely withdrawn, then reorder point.
3. Clean up Units
   For each item: Storage unit (how do you count/store?) and ordering unit (how does supplier order?). Consider PU. Document in Excel table.
4. Define Order Time
   A fixed order window reduces chaos. Example: Every Monday and Thursday at 4:00 PM all purchase suggestions are checked and released. Not "when there's time", but fixed time.
5. Define Responsible Role for Release/Ordering
   One person is responsible (name). Define deputy. Not "team" or "whoever has time".
6. Sharpen Rules After Four Weeks
   Set review appointment. Questions: What was missing (reorder point too low)? What was too much (Max too high)? Lead times realistic? PU problems? Adjust rules, next review in four weeks.

Tool Recommendations Without Major Investment:

• No Budget: Excel/Google Sheets: For stock list, reorder points, PU table. Free, flexible.
• Low Budget: Automated disposition via repleno or other tools with Min/Max and purchase suggestions. Specifically built for craft businesses, costs from 25 euros/month.
• Tip: Scan Instead of Count: Barcode scanner (from 50 euros) or smartphone apps significantly accelerate stock recording.

Follow-up article: The best warehouse management in crafts without ERP ? Click

Conclusion

Procurement methods are not a luxury for large businesses. They are the rulebook that decides whether your team works productively on construction sites or constantly organizes material. The right method fits your consumption profile, team size and warehouse discipline.

Two things are crucial:

1. A clear signal that reliably triggers demand (report, scan, Kanban signal, threshold value)
2. A clear rulebook that turns this into an order (cycle, reorder point, Min/Max, supplier service)

Approach:

1. Start with your top-30 consumable items
2. Choose with one method
3. Define responsibilities.
4. Check after four weeks what works and what doesn't.
5. Adjust.
6. Repeat.

Author Christoph says:

Procurement is not a project with an end date. It is a process that develops with your business. But with the right foundation, you turn chaos into routine - and gain time for what really makes money: Implementation of your orders instead of time loss in the warehouse.