In brief
The minimum order quantity (MOQ) is the smallest quantity of an item that a supplier accepts per order or delivers on the stated terms.
Contents
What is Minimum order quantity?
Suppliers set an MOQ because every order incurs fixed costs, for example for order processing, setting up production, packaging units or minimum lots from their own upstream supplier. It is to be distinguished from the minimum order value, which specifies a minimum amount per order rather than a quantity.
Minimum quantities may relate to an item, a variant or an entire order. They frequently result from packaging units, such as bags of O-rings or reels of hose, or from production lots for custom parts. Some suppliers offer smaller quantities subject to a small-quantity surcharge. For the buyer, this creates a conflict of objectives: the MOQ may exceed actual demand and thus lead to excess stock and tied-up capital.
In the spare parts business, minimum quantities often apply to small parts, seals or customer-specific components. If only one piece is needed, purchasing and maintenance face the choice of accepting the MOQ, pooling the demand of several sites or looking for a source of supply with smaller lot sizes. A comparison of total costs shows which solution is more economical.
In practice: maintenance and procurement
Enquiries should state the quantity actually required and explicitly ask about minimum quantities, packaging units and small-quantity surcharges. For recurring demand, a framework agreement with call-offs can mitigate a high MOQ.
Synonyms and abbreviations: MOQ · minimum purchase quantity · minimum quantity · minimum lot size
Frequently asked questions
What does MOQ mean?
MOQ is the abbreviation for minimum order quantity. It indicates the minimum number of units a supplier sells or the volume from which a certain price applies. The information is usually found in the quotation, the catalogue or the supplier's terms of delivery and sale.
What is the difference between minimum order quantity and minimum order value?
The minimum order quantity refers to the number of units of an item, the minimum order value to the total amount of an order. A supplier can specify both. Anyone ordering many different small parts from the same supplier often reaches a minimum order value more easily than the minimum quantity of a single item.
Can a minimum order quantity be negotiated?
Often yes, especially if the MOQ derives from packaging units or handling costs. Options include small-quantity surcharges, partial deliveries from a larger order, framework agreements with call-offs or pooling the demand of several sites. For custom manufacturing, there is less scope, because set-up and material costs are largely independent of the quantity.