Project:
Role:
Client:
Replenishment model non-normal demand
Lead Consultant
MNC Oil & Gas
Through intensive research and simulation of various replenishment approaches, the conclusion was that using a FILL-UP or a HUB-SPOKE model was a better solution for SKUs with a lumpy and intermittent – and sometimes also erratic – demand profile.
A pilot was run for a specific part of the portfolio that is lumpy by design and significant inventory reductions and service improvements were achieved.
While working on an inventory scenario modelling exercise, it was realized that the client’s demand pattern is not normally distributed, and standard forecasting and inventory planning techniques do not apply.
A new segmentation approach was developed, looking at the demand interval – the average time between sales orders – and the demand volume variability as the two dimensions. This resulted in a segmentation into smooth, erratic, intermittent and lumpy demand patterns.