Definition of Replenishment
Replenishment is the process of restocking an item or material to its original level or state. It is a common practice for businesses that need to keep their stock up-to-date, as it ensures that they always have the materials and products necessary to provide excellent customer service. Replenishment focuses on acquiring products to support anticipated need, and the demand forecast is the key to understanding that future need.
Types of Replenishment
There are three different types of replenishment: complete, semi, and non.
- Complete replenishment is when the entire stock of an item is replaced at once.
- Semi-replenishment is when some of the stock is replaced at a time, and then the rest is replaced as it runs out.
- Non-replenishment is when no new stock is added, and the existing stock is simply used until it runs out.
Methods of Replenishing Stock
There are many ways to control stock, whether you use techniques that specify when to order, forecasting formulas, or just-in-time (JIT) . Here are some examples:
- Vendor manages your stock: The supplier continuously monitors inventory levels and automatically replenishes them as needed (when they fall below the threshold) .
- Min-max: Set minimum and maximum quantities for each item.
- Just-in-time (JIT): Goods are only onsite when theyre needed.
- 2-3 bin system: One container is always in use, and one or two containers are always full. This is for small parts that are small volume and can be resupplied quickly.
- Continuous flow model: Managers will need to regularly replenish raw materials to prevent production bottlenecks.
Pros and Cons of Replenishment
Pros:
- Ensures that businesses always have the materials and products necessary to provide excellent customer service.
- Can reduce stockouts and improve supply chain visibility.
Cons:
- The time required for item setup and forecasting often outweighs the savings from the automation of forecasting and ordering.
- Replenishment processes and solutions are more sophisticated than the initial definition.
