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Store inventory replenishment is an essential yet surprisingly complex task for any retail business. Successful replenishment strategies maintain high levels of on shelf availability w
optimising the cost of providing the replenishment service. Get it wrong and not only will sales suffer but both DC costs and stock levels could be higher than necessary.
Firstly, there is the complexity of products and stores. A typical retail store may have thousands of products each with many unique attributes. In turn, a retail chain could include do
hundreds of stores of various sizes across a wide geographic area, each carrying different ranges. A popular product in one store may not be in another. A large store close to the
get daily deliveries whereas a remote, local store would only justify weekly deliveries.
Custom and practice can often result in businesses operating sub optimally. Growth in sales and range, for example, can mean that what was an appropriate case quantity some ye
may not be so today. As retailers continually work to maximise the revenue from every part of their stores, the decision whether to pick in singles or cases or a combination of the tw
change. And even if a case quantity is deemed the best replenishment unit, what size cases are optimal for each product? What is the most appropriate replenishment order trigger
How often should the stores be replenished?
Instead deficiencies in ordering systems or the way they have been configured often lead to Store Managers being given considerable freedom to adjust order quantities in ways tha
not be best for the business.
These appear such simple questions and yet the answers are not easy to get at. So, in response to a number of requests, The Logistics Business has developed a new module
Replenishment Strategy Simulator (RSS) to add to its suite of modelling tools.
The RSS model takes into account all of the key factors that influence store replenishment. They fall into three categories:-
The model takes a range of data inputs from the existing operation such as :-
Different replenishment strategies can be modelled and the main outputs from the modelling are:-
The number of order lines generated. This is the main driver of the picking workload;
The number of pick face accessions and pick units removed from the pick faces;
Comparative net costs of alternative strategies;
The store stockholding and on-shelf availability.
The following figures generated by the RSS model show visual examples of the impacts of different strategies on the replenishment pattern of a sample product using the Min logic
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Figure 1: this product is always replenished in case multiples. A replenishment order of 1 case (6 singles) is triggered on the stock polling day when stock level drops below the Min
setting, which brings the stock level above Minimum when the delivery arrives in two days.
Figure 2: single item replenishment is allowed in this scenario. As a result, the average stock level is reduced and now never exceeds the Minimum setting (apart from the initial star
stock level used in the model). Replenishment frequency increases dramatically which will result in a significant increase in order lines.
Figure 3: the Minimum setting is reduced while single item replenishment still applies. As a result the average stock level is lower and replenishment frequency remains very high. C
with case picking, a single item replenishment strategy reduces stock level fluctuation and keeps it close to the Minimum level, which may in turn provide the opportunity to reduce s
stock.
Figure 4: This last scenario halves the replenishment frequency, which results in a reduction in order lines.
The RSS model automatically repeats the same simulation illustrated above for all sample products from all sample stores, aggregates and translates the results into workload (man
total operational cost and overall stock level.
Using this tool, we have already helped a number of retailers ensure that they are picking and replenishing in the most appropriate pack quantities and frequency, thus maximising o
availability and optimising overall operating costs.
If you would like to find out more about how the RSS model could help your business, please contact The Logistics Business through our website www.logistics.co.uk or telephone 0
889060.
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Zone Manager
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