When managing warehouse operations, one of the most important aspects is an accurate and efficient system to manage the replenishment of inventory to locations that are accessible to pickers. The successful management of overall inventory against accessible inventory can greatly reduce labor costs, ensure on-time deliveries, and reduce the risk of logistical problems or excessive overstock in any one warehouse.
In looking at how warehouse replenishment works, it's important to understand what factors influence stocking procedures in a warehouse or between facilities, and how these procedures can impact overall efficiency for the business.
The Basics of Replenishment
One of the reasons a good Warehouse Management System is so important is that, without one, the volume of inventory can become unmanageable beyond a certain point. As orders are picked from accessible locations, delays can stack up if overstock isn't used to replenish those locations efficiently. At the same, if overstock is moved too early or too often, additional labor hours are utilized, creating inefficiencies in the opposite direction.
There are several ways this can work in an organization. The most common example is a single warehouse with racking. Order pickers will access stock on the lowest shelves to avoid the use of a lift truck. Overstock of the same SKUs is stored higher in the racks. When inventory in the accessible areas gets too low, a replenishment is triggered and someone operating a lift truck will access the higher shelves and move stock to the lower levels.
The same happens in organizations with multiple warehouses where inventory has to move from one facility to another, albeit with more logistics involved transferring goods between the locations. The goal in either case is to be able to rotate goods into a pickable location just before they are needed in order to reduce the risk of inaccessible inventory while avoiding wasted time from replenishing too frequently.
Logistical Structure of Replenishment
Of course, there are many factors that influence just how often this might be. For a single facility, replenishment depends on several factors, including:
- Accessibility of overstock
- Frequency of picking for certain SKUs
- Amount of a particular product in stock
If a product is ordered sporadically every few days, it's possible to set restock levels much lower—only requiring replenishment when there are a few items left in the primary picking location. If a product is ordered multiple times a day, not only will more accessible space need to be set aside for inventory, but replenishment will be needed more often as well. If the majority of overstock is in the same facility, the turnaround time is much shorter, so the stock can get lower before replenishment occurs, but if stock must be transferred from another facility, transit time must be taken into consideration as well.
There are challenges to ensuring such a system remains as efficient as possible. Human operators can easily miss seasonal changes in demand, availability of staff to access higher inventory, surges in transport of goods between facilities, or obsolescence of certain products. Everything from a seasonal sale to a surge in demand related to current events can impact how much needs to be stocked and when.
For this reason, a good replenishment system needs to be plugged into the entirety of the process—taking in data about staff, demand, sales, upcoming projections, and accessibility of stock both internally and in other facilities.
How Replenishment Systems are Structured
There are several methodologies for warehouse replenishment systems, some of them utilized at different times in the same organization. They include:
- Demand Replenishment
For those with a limited number of picking locations, demand replenishment can make sense. This is usually used in full or part when it's not possible to dedicate significant space for any one item unless it is already being picked. But there are other factors to consider here, including dynamic pick slotting and fluctuating demand spikes for certain products.
- Routine Replenishment
This form of replenishment is the simplest, triggering restocks when a certain item reaches a minimum threshold. This is the most common replenishment option when the demand remains relatively stable and seasonal shifts can be effectively predicted based on historical data. If there is enough space and data is plentiful, static slotting for long periods of time is more feasible.
- Top-Off Replenishment
The last methodology for replenishment is top-off, which often works in tandem with the other two methods. This is when you top off the inventory for specific products based on expected demand or a shift in available staff. If you expect reduced staff availability or if picking activities are reduced for any period of time, having a system that can trigger top-off for high demand products can reduce the need for replenishment later.
Each of these three methods can work well in different situations. The key is to understand what your business's resources allow for and what your current WMS can support.
Implementing a New or Updated Replenishment System
If you are working to improve the efficiency of your warehouse operations, a good warehouse management system that supports dynamic replenishment based on the amount of space you have available, projected demand for key products, and staff availability will allow you to be as efficient as possible, reducing potential delays and keeping everyone on the floor busy. Ideally, your WMS will take care of most of this in the background, without the need for manual intervention.