How to ensure adequate stock replenishment

Stock replenishment procedures are crucial in inventory management because they ensure that the correct stock items are reordered to satisfy consumer demand. Therefore, replenishment planning is a significant business move. Moving things along the supply chain so that they are ready to be chosen and dispatched, allowing orders to be fulfilled on time, is known as stock replenishment.

Stock replenishment strategies that work involve maintaining optimal inventory levels through effective stock replenishment is a tricky balancing act, as any supply chain management expert will tell you. Yet, when done right, inventory replenishment planning may improve operational efficiency, reduce supply chain risk, and boost bottom-line profitability. Here’s a quick rundown of stock replenishment and how effective inventory replenishment techniques can genuinely provide value to any company.

The process of stock replenishments

Inventory replenishment teams guarantee they have backup items to replenish shelves as commodities depart a warehouse or are used in a manufacturing process. This means that in the background, and inventory management team needs to monitor stock levels and focus on ordering the right inventory items at the right time to ensure stock availability and be ready for replenishment.

The financial impact of stock replenishment

Stock replenishment procedures can significantly impact a company’s inventory risk and financial status. Most organisations lack the necessary working capital to fully stock every SKU to ensure 100 per cent availability. Instead, they strike a balance between the expenses of retaining stock, such as warehousing fees, opportunity costs, cash flow issues, and the risk of not having enough, such as missed sales targets or costly backorders. This inventory investment risk can be balanced by a sophisticated replenishment planning team that: Uses statistical demand forecasting approaches and accurately projects future stock requirements.

  • Prioritise which stock products to carry based on projections, demand volatility, pick the frequency, and sales cost. They can then define service level targets (or order fulfilment targets) depending on these criteria, such as setting more excellent service level targets for things that are less expensive to sell and have steadily high demand, as opposed to more expensive items and have low intermittent demand.
  • Businesses are in a far better financial position with excellent stock replenishment procedures. Businesses will be able to spend the appropriate amount of working capital in stock to fulfil orders and maximise sales without risking a build-up of excess or even obsolete stock due to over-ordering.

Inventory process through the supply chain

Stock replenishment that is done well using a merchandise planning software can bring value to a supply chain from start to finish:

  • Manufacturers – assure constant raw material supply and avoid costly production delays.
  • Wholesalers – enables them to meet customer orders on time, ensuring that they remain loyal and return for more.
  • Retailers — help avoid the terrible “out-of-stock” situation and maintain favourable customer ratings, which is great for any brand.

Optimising inventory levels at each stage of the supply chain is the key to excellent stock replenishment. This can be accomplished by centralising inventory planning so that forecasting and replenishment activities are carried out with a comprehensive supply chain perspective. This keeps investment in check and service levels optimised by preventing too much or too little inventory.

Returns are another inventory threatening issue that businesses need to be aware of. For more information on how returns impact logistics, please see the resource below.

Infographic provided by KGR Logistics – managed transportation solutions

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