One of the most important factors in ensuring accessible, properly stocked inventory is your replenishment policy. There are three major methodologies you can use for your replenishment needs depending on the nature of your business. Demand Replenishment works well for those with limited space and high inventory rotation. For those with predictable throughput and measurable demand spikes, Routine Replenishment is usually a good choice. Finally, Top-Off Replenishment can be used by those with a set schedule and ample space.
Your replenishment policy is important due to the impact it will have on your business, so let's look at the three major options you have and when it makes the most sense to use each in conjunction with your Warehouse Management System.
When Demand Replenishment Makes Sense
For warehouses with space limitations or other restrictions, Demand Replenishment is often the first choice. When using Demand Replenishment, you move inventory into pickable locations only as it is needed to fulfill a single order or groups of orders. This method is used in a number of situations.
The most common reason for opting to go this route is a lack of space—specifically, if you cannot afford to dedicate space for a picking location unless there is already a pick request in the system for the product in question. Additionally, Demand Replenishment can be a way to enforce stricter inventory rotation since you can ensure that only your oldest inventory is moved to a pickable location.
There are some things you'll need to keep in mind when implementing demand replenishment, all of which can be addressed in part or in full by your Warehouse Management System. If demand spikes to the point that your staff isn't able to move inventory quickly enough, it can create bottlenecks that slow down fulfillment. Such spikes and real estate availability should be factored into the system.
When Routine Replenishment Makes Sense
Routine Replenishment is the most straightforward replenishment strategy. Restocks triggered when inventory levels reach a certain minimum threshold. Sometimes also called "Triggered" or "Opportunistic" Replenishment, this method ensures picking locations are always sufficiently stocked for projected demand. Your Warehouse Management System can track these minimum thresholds and automatically create replenishment orders or send alerts for restock when they are breached.
When does this method make the most sense? It works best in scenarios where you know fairly well what is going to be demanded and when. Commodities, seasonal products with a long history of data to back up demand projection, and other situations where you can predict what your needs will be make sense for Routine Replenishment.
Of course, for this method of replenishment to work, you need enough space in your warehouse to accommodate the minimum stock level and the replenishment amount at your accessible pick locations. If this space is limited, Demand Replenishment can still make sense, but will require more active management to meet those expected demand levels.
When Top-Off Replenishment Makes Sense
The third major type of replenishment system is "Top-Off." Top-Off Replenishment is designed to be run on a set schedule or batch release rotation, adding inventory to your pick locations before those minimum thresholds are reached. Pickable inventory is "topped off" to a predetermined maximum. Top-Off can use the same minimum-maximum threshold triggers as Routine Replenishment, but it is usually considerably more active. Rather than waiting for a minimum to be hit, Top-Off Replenishment involves configurations that use the min-max budget to trigger replenishment orders, potentially for varying quantities.
What are the benefits of this over a more straightforward routine system? To start, it greatly improves task efficiency, allowing your staff to complete existing tasks within their normal schedule alongside these periodic top-off requests. It also decreases the amount of time your equipment might be idle or moving between locations without moving inventory. It ensures ample activity on the floor and reduces the risk of bottlenecks due to demand spikes. In some situations, it can also help to manage minimal real estate by combining pallets and moving stock to picking locations more actively.
Because of the dynamic nature of this replenishment method, a good Warehouse Management System is necessary to ensure not only that minimum and maximum thresholds are logged and updated accordingly, but also that those picking requests are sent as soon as necessary to available staff.
Choosing the Right Method for Your Company
There is no "perfect" replenishment method that works for all businesses. Your business goals, available real estate, pick frequency and predictability, and throughput (both expected and demand-driven) will all impact which replenishment method makes the most sense for you.
What works for you now might change in a few months or years as well. A good Warehouse Management System will help you to benchmark and adjust your approach actively, looking for opportunities to improve your operations, possibly combining several aspects of the above three methods.
