This report is the fourth in a series of white papers designed to help forward-thinking distributors increase efficiency, customer service, and profitability with smart inventory management strategies based on tried and proven methods and best practices. To learn more about effective replenishment parameters download the entire white paper.
Many distributors rely on their computer software to help them decide when to replenish the inventory of stock products and how much of each product to reorder. They are relying on the system to alleviate customer service problems and improve profitability. Unfortunately we’ve found that management and even buyers often do not understand the actual definition and purpose of each of the application’s parameters. As a result, the system is often set up incorrectly or misused, and the distributor does not receive all of the possible value from this very expensive tool.
In this document we discuss some common replenishment parameters found in distribution application software packages.
Please keep in mind that though the actual name of a specific parameter may be different in your system, the concepts are probably very similar or even identical. Be sure that all of your employees who are responsible for replenishing products understand these concepts. With this knowledge they will be able to maximize their productivity and help your organization achieve the goal of effective inventory management.
Please note that the parameters discussed in this document are designed to replenish stock items with recurring usage. That is, products that are sold on a regular basis. “Target stock levels” of items with sporadic usage are discussed in the Improving the Accuracy of Forecasts white paper as part of this series.
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