In this step the available replenishment calculation methods are explained.
Available replenishment methods:
- Stock based
- Estimate based
- Sales history based
- Replacement of sold items.
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Stock based (Stock Level)
The stock based method uses static Reorder Points and Maximum Inventory values to identify if there is a demand to replenish an item in a store or warehouse.
This is a typical approach for slow movers or to maintain a defined display stock for items.
For more information see Stock Levels, Calculation Methods - Overview.
Estimate based (Manual Estimate)
The estimate based method uses a sales estimate to identify if there is a demand to replenish an item in a store or warehouse.
This method is often used for newly introduced items without a sales history and with no similar items where the sales history could be used. After the introduction period this method is usually replaced by other replenishment methods.
For more information see Manual Estimate, Calculation Methods - Overview.
Sales history based (Average Usage)
The sales history based method uses sales history to calculate a forecast to identify if there is a demand to replenish an item in a store or warehouse.
This method is used in most scenarios, it can calculate forecasts from sales history with consideration of seasonal patterns. Additionally, Reorder Points and Maximum Inventory can be defined.
For more information see Average Usage, Calculation Methods - Overview.
Replacement of sold items (Like for Like)
This method replaces sold items with the same quantity in the stores.
This is used for slow movers or items that are initially allocated to stores and then replenished with the same quantity as sold. High-price items, like jewelery or expensive watches, are typical examples.
For more information see Like 4 Like, Calculation Methods - Overview.
Goal
The goal of this step:
- Get an understanding of the needed replenishment methods
- Select applicable methods for retailer.
Key questions / considerations
To gain information about the needed replenishment methods it is important that the retailer understands the capabilities of the different methods.
Therefore, it is best practice to present and demo the different methods first and then start the questions.
Questions:
- Which of the presented replenishment methods are currently used?
- Do the methods cover the requirements?
- Are other methods in use?
- Which?
- Can those be covered with LS Replenishment methods?
Output
The output from this step is an overview of applicable replenishment methods.
Examples:
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