Plan replenishment

We all know what it's like to go shopping in a supermarket that has run out of key items, with nothing but empty shelves where our favourite sauce or meat should be. There could be any number of reasons to explain why the shelves are empty, from delayed shipments to unexpected customer demand to a shortage in deliveries. Of course, it could simply be that the supermarket has not planned its replenishment effectively.

To minimise the likelihood of your business being unable to provide the required goods and services to your customers, you should ensure you have a clear stock replenishment plan. This involves all aspects of production, procurement, warehousing, shipping and distribution of finished goods.

Production

In order to ensure that your business can replenish stock as and when required, it is important to manufacture or order according to projected requirements. These forecasts can be determined by:

• Analysing historical usage
• Assessing changing trends
• Using customer forecasts

Procurement

All purchasing decisions should also be based on your product forecasts. The placement of orders needs to take into account lead times, shelf life and your Min-Max stock holding levels (i.e. what minimum and/or maximum levels of inventory is your business able to hold at any given time?).

Warehousing

The physical location of your stocks will have an important impact on how quickly you can replenish in order to meet customer demands. If, for example, your warehouse is situated in Kent but your customer is based in Glasgow you need to ensure that you receive ample notification when the customer's stocks are getting low. This is achieved through scheduled customer orders.

Shipping

Key to meeting customer demands is the timely delivery of goods. Whatever shipping method you use, you need to make sure that your lead times are competitive and sustainable. Choose the most suitable shipping method available so that you are able to replenish in time. If you are importing goods, make sure that your suppliers are reliable and that the freight transport times meet your requirements.

Distribution

The despatching of goods to customers means that your stocks will go down. How you plan the replenishment could play a critical role in meeting the next customer's demands. For example, if demand has been greater than expected, do you move forward the next scheduled delivery or do you wait? Unless your stock levels have gone below your minimum stock holding levels, then there should be no need to restock immediately and incur further cost.

Contingency plan

You can't always ensure the smooth delivery of your goods at all times. If your usual suppliers let you down, or if demand outstrips supply, you should have a contingency plan. This may mean having a set of secondary suppliers who can provide you with the necessary products at short notice.

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