Too often we hear managers talking about warehouse replenishment and fulfillment using the terms interchangeably. These two terms actually refer to different parts of your warehouse process, and in order to manage each area of your warehouse effectively, you need to understand what they are and what unique challenges they present. Let's take a look at both warehouse replenishment and fulfillment to get a better grasp of what each term means.Warehouse Fulfillment
To start with, we will look at the term warehouse fulfillment. Fulfillment is really an umbrella term that covers all of the processes involved in getting a product from a vendor to an end user. This includes everything from the moment you receive the product at your warehouse until you ship it out to the customer with stops along the way for processing, packing, and even returns when necessary. When you talk about fulfillment, you are really talking about how you are going to serve your customers from the moment they place an order with you. The smoother your fulfillment process runs, the happier your customers will be.
Warehouse replenishment is a much more limited term. Replenishment only refers to one of two things. The first is refilling your warehouses with products that you regularly order from external sources. This is a short process that usually only involves a few steps, and is focused on the relationship between you and your vendors, not your customers. When you're discussing re-order points and inventory transfers between facilities, you're talking about replenishment. Within the external replenishment sphere, you should also be concerned with product lead times and avoiding shortages of stock whenever necessary. Obviously, a shortage of stock in the replenishment process can be very disruptive to your fulfillment process.
Alternatively, the term replenishment can also be used when referring to one specific step in your fulfillment process. The movement of items from bulk storage locations to forward pick locations is also called replenishment. This terminology is used to differentiate these movements of stock within the warehouse from other tasks such as receiving, put away and picking.
With this understanding of what fulfillment and replenishment really mean, it's easy to see why they are not interchangeable. They actually deal with different relationships, although replenishment is a key element of fulfillment. In general, when you are discussing these processes, you will be looking at different sets of data. In replenishment, you are looking at internal numbers related to your inventory management while fulfillment is concerned with the time it takes to get orders out the door and the accuracy of those items. Not only are the terms used to describe different processes, but they also have different sets of metrics for measuring success. You will need all of them to adequately serve your customers.