As you might know, stock replenishment is one of the most important things you have to consider when it comes to inventory management. Stock replenishment helps to ensure the right stock is on the shelves at the right time, this can help with keeping inventory holding costs low and it will definitely make your customers happy.
The coronavirus pandemic as disrupted the supply chain, meaning that replenishing your stock during these times might be difficult. If you order your stock from overseas – China – it means that you might have to wait weeks or months until they can fulfill your order. This means that you might be losing customers. Luckily, we’ve had a look at a couple of alternative options to Alibiaba from where you can order new supplies.
What is stock replenishment?
Stock replenishment is an operation that consists of keeping the inventory flowing through the supply chain at an optimal rate by maintaining stock levels. This prevents costly inventory overstocking.
In this post, we’ll walk you through a couple of useful strategies that are essential when it comes to stock replenishment.
Now it is more important than ever to collect data
Data from your warehouse locations is a powerful performance indicator and can also indicate how your replenishment process is working under the current pandemic. If you have multiple warehouses, you will have to collect data from each warehouse and analyze the data accordingly. Your stock replenishment during the coronavirus pandemic will depend on the data collected as you will have to give up on ordering certain products. On the other hand, you will have to order more of other products that didn’t sell as well during normal circumstances, such as hand sanitizing gel or sanitizing wipes.
Data from each of your warehouses will allow you to gain better insight into things like:
- How fast do your products move off the shelves
- Which of your products is replenished more often
- How fast does a product reach a reorder point
- Are you reordering the right quantity
- Are you reordering too frequently, or not frequently enough?
Once you have gathered the information from your warehouses, you’ll have to analyze the data for more accurate demand forecasting. If you can forecast the demand more accurately, it means that you will be able to predict how much of a product gets sold in a given period of time – preventing out-of-stocks that could hurt your relationship with customers – and in these times of need, customers will change their go-to stores on a whim.
Product reorder point when it comes to stock replenishment during the coronavirus pandemic:
The reorder point is the stock level that indicates that you will need to order new inventory. It is determined by a number of factors, but mainly it depends on your demand forecasts and lead forecasts.
Demand forecast– how quickly your remaining stock will deplete
Lead time forecast – the time it takes your shipment to arrive
So when should you order new inventory?
You know so far that you have to replenish your inventory when it reaches the reorder point – but how do you know exactly when that will happen?
There are 2 strategies for reviewing stock levels:
- Continuous review: this means that your stock levels are constantly under review until they reach the reorder point. This strategy is ideal for larger companies that have fast sales cycles and resources to constantly measure their stock levels, in particular, an inventory management system. A continuous review of your inventory is essential during the coronavirus pandemic.
- Periodic review: this involves reviewing your inventory in a periodic cycle. This can be weekly, monthly, or whatever your demand and lead time forecasts dictate. This is ideal for start-up businesses or brands which have slower sales cycles.
How much should you order?
We’ve determined at what point you should order new inventory, now let’s find out how much you should order. This can be determined with two approaches:
- Fixed order quantity – This is very simple, every time your inventory reaches a certain stock value, you reorder the same quantity. This is ideal for businesses using a continuous review strategy.
- Order up-to x level – this method is used by companies that have a certain level of products stocked at the beginning of every review period. This means that you will have to order however much stock it takes to reach that level. This is ideal for businesses that have less frequent review periods – in this case, the order-up level should be determined by your demand and lead time forecast – because it has to last until the next periodic review
Stock replenishment during the coronavirus pandemic is headache, without having the proper tools at your disposal you might end up with unfulfilled orders, causing a drop in sales. Nventree was developed to help you manage your inventory even if it means that your products are in different warehouses. Our software syncs up with your eCommerce platforms and adjusts the stocks on all of them if a sale is recorded.