What is stock replenishment?

stock replenishment
Read Time: 2 minsStock replenishment is one of the most important considerations regards to inventory management, as it guarantees the right stock is on the shelves at the right time, while keeping inventory holding costs low and customers happy.

What is stock replenishment?

Stock replenishment is the rate at which inventory goes along the supply chain from the manufacturer to the supplier to warehousing, picking, and shipment areas. The point of stock replenishment is to keep inventory flowing through the supply chain at an ideal rate by keeping efficient control and line item fill rates. This cycle helps prevent costly inventory overstocking.

Generally, dominating the pace of stock replenishment was a challenge because it implied manually tracking every piece of stock as it moved along the supply chain via spreadsheets (or even a paper trail!). Today, however, automated stock replenishment is made possible conceivable by wise inventory management systems that monitor and update stock movements automatically, without the need for manual intervention. This equals significant time savings and reduces the risk of human error.

Stock replenishment principles :-
1. Safety stock A key thought for stock replenishment is wellbeing stock. Otherwise called ‘buffer stock’, safety stock is stock held in a reserve to prepare for shortages: perhaps customers out of nowhere can’t get enough and you haven’t figured that into the demand, or perhaps there’s a delay with the supplier. In any case, safety stock keeps you covered in the event of unexpected conditions.

Here’s a typical safety stock calculation:-
  • Multiply your most extreme daily usage by your maximum lead time in days.
  • Multiply your normal daily usage by your average lead time in days
  • Calculate the difference between the two to decide your safety stock

2. Reorder Point
Most inventory management systems go after replenishment guidelines to automate operations. Replenishment is typically set off when inventory levels hit what’s known as the reorder point. The reorder point is the place at which stock needs to be reordered – considering current and future demand, along with how long it will require your supplier to send you the new order.

Calculating your reorder point manually takes three steps:
  • Compute your lead time demand in days.
  • Compute your safety stock in days
  • Sum your lead time demand and your safety stock to determine your reorder point.

To make life more straightforward, you can likewise utilize a reorder point mini-computer. It’ll tell you precisely when now is the ideal time to submit a request for another shipment of items. Realizing your reorder point and optimal safety stock level goes hand in hand with maintaining good stock replenishment principles.

For more information and a tailored demonstration, please contact us or at sales@goodsorderinventory.com

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