Inventory replenishment: Can you see the future of retail?
Inventory replenishment is the essence of your bottom line. It is the critical link in your supply chain that everyone needs to review and tighten.
You don’t need a crystal ball to utilize the principles of demand forecasting and inventory replenishment. But, you do need a crystal-clear game plan to ensure that you can deliver today what the customer dreamed about the night before.
The Customer is Always Right; is Your Inventory?
The customer expectation of ‘I can dream it one night, and get it the next day’ is a dramatic shift for the retailer. This shift of expectations is forcing a better response from retailers. The customer wants it now, for the right price, and with a smile.
And just to underscore the implications of responding to this consumer demand, several presentations at Retail’s Big Show in January, discussed mastering the balancing act of maintaining a high level of service without overspending on inventory.
Common Inventory Replenishment Obstacles Include:
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2. Vendor Restrictions
- Lead Time
- Minimum to ship
- Pick Size
- Date to Place Order
- Lead Time to DC
- Lead Time DC to Store
- Vendor Lead Time Direct to Store or Customer
- Lead Times for Cross Dock & Flow Through
3. Order Cycle
- How much to buy calculated with one of the two methodologies
- Top Down Plan (push)
- Bottom Up Service (pull)
- Current Inventory
- Pipeline (On hand, On Order, In Transit, Waiting to Ship)
5. Promotions, Events, Seasonal and/or Market Reaction
Modern Markets Require Smart Inventory Replenishment
Measuring and analyzing all of these pieces to optimize the amount of inventory to purchase and then build the purchase order takes a great deal of computing power. Suffice it to say, if your software is over 5 years old, it is managing some of these pieces well (maybe?), and some not at all. If you are using Excel for inventory replenishment, stop. Also, how old is your data, and can your inventory replenishment system respond quickly, even multiple times in the same day? Only recent hardware technology changes have made it economical to calculate all of these into a profit optimized replenishment order.Learn More
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