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.
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.
Of course, there are many factors that influence just how often this might be. For a single facility, replenishment depends on several factors, including:
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.
There are several methodologies for warehouse replenishment systems, some of them utilized at different times in the same organization. They include:
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.
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.