White Paper | August 11, 2006

Inventory Replenishment: What Is It Exactly And Why Is It Important?

Source: Integrated Solutions For Retailers Magazine

Dictionaries define Replenishment as "filling again by supplying what has been used up." This definition does not adequately address the business conditions in retail inventory management. After all, if an item recently sold several hundred pieces for an ad that has concluded – should several hundred more be brought in to replace what has been sold?

What if an item is going to be discontinued next month or just completed a major season such as candy corn in November – should replenishment blindly fill in again? The complexities of retail dictate that replenishment processes and solutions are more sophisticated than this initial definition. When looking at retail replenishment, a more appropriate definition would be "acquiring product on a recurring basis to support anticipated need."

Replenishment is also a process that occurs regularly. If vendors only offer merchandise in a limited number of shipments – common in the fashion industry – merchandise planning and allocation should be used to support ordering. While replenishment can support these situations, the time required for item setup and forecasting often outweighs the savings from the automation of forecasting and ordering.

Replenishment can be broken into base components for easier definition, description of best practices and discussion of the benefits available.

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