Replenishing is the process that decides when you are going to order (or supply to a warehouse, or produce a product) and how much you need to order to have enough until you order again (or supply, or produce). Depending on the value, volume, predictability and frequency of the demand, as well as the cost and reliability of supply, there are different replenishment strategies possible for a product.
- Fixed Order Cycle Planning, ordering the product at a predefined rate (typically every month or every week), and calculating the required quantity based on the use or forecasted demand. Most often in this model you will replenish what was sold in the previous period, as you fill up the stock to an agreed top-up level.
- Fixed Order Quantity Planning, ordering a predefined fixed amount (typically a lot size, full container, or one unit in Kanban) whenever you hit a trigger point, the reorder point. This means sometimes you may order very frequently, while at other times you order only once in a while.
- Distribution Requirement Planning, a continuous process of calculating the stock requirements per location based on the forecasted demand, and pushing this stock requirement back up the supply chain to calculate an aggregated, time-based view of demand and supply for each stock point in the network.
In this process, IPREM Consulting can support with the following:
- Determine which replenish model works best in your supply environment. This may be different per location, customer or product group.
- Set up the calculation model to help determine when to order and how much to order, either as a one off exercise to determine the parameters, or as a daily tool to support the people responsible for creating the replenishment orders. An example of this can be found in the case study “Switzerland”.
See also: ⇒ Consultancy: Inventory Planning
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