Stock replenishment, or inventory replenishment, refers to the process of moving stock along the supply chain to ensure sufficient inventory is available to meet demand. Efficiently replenishing inventory is a critical process as it directly impacts customer satisfaction and a company’s profitability. There are four main methods businesses use for their restock strategies to meet demand.
Reorder Point Strategy
It is also known as the Min/Max Strategy. The reorder point is the signal or threshold at which inventory needs to be replenished. It represents the minimum quantity of a product that a business must keep in stock. When the inventory level of that item falls below this point, it should be reordered. Implementing effective restock strategies ensures that inventory levels are maintained appropriately.
In this method, stocks are reviewed continuously, and when the stocks fall below predetermined levels, a replenish order is triggered. Placing an order for stock when the inventory reaches reorder point ensures the new stock arrives before the company runs out of stock.
The reorder point strategy tends to work best for companies that market fast-selling products or products with fluctuating demand. Establishing a reorder point simplifies the process, triggering reorders when there is ample lead time to implement restock strategies and ensure you have safety stock on hand.
Having minimum and maximum inventory limits prevents you from understocking or overstocking items.
Periodic Point Strategy
In the Periodic Point strategy, businesses will set inventory intervals for restocking. Businesses will examine stock levels weekly, monthly to determine in-time replenishment.
If the inventory is running low, an order to restock strategies the item will be placed, and if the inventory is adequate, no order will be placed. However, there is a rule in the periodic point strategy: even if the stock runs low before the specified time interval, a firm will not place an order to restock strategies until the review point.
Top-off Strategy
Another name for this is the Lean Time Replenishment strategy. This strategy uses slow demand periods to top off the inventory in its respective storage locations. It helps to maintain a high inventory turnover rate without encountering stockouts for pickers.
Top-off replenishment maximizes utility during downtimes for more efficient performance during high-demand periods. During slow times, the inventory is topped off based on the minimum and maximum inventory limits, similar to those in restock strategies like the reorder point strategy.
It is the best-suited inventory replenishment strategy for fast-moving SKUs with short picking windows. Optimizing the supply chain during a slow demand period prepares them to manage high demand periods efficiently.
Demand Strategy (If You’re on BigCommerce)
When current inventory cannot meet consumer demand, merchants who use this strategy will place a restock strategies order.
The challenge in restock strategies lies in careful planning to ensure there is enough quantity on hand to meet demand. In the ever-changing retail industry, it is crucial to monitor the market and forecast demand correctly to ensure optimum inventory is in stock to meet demands.
For startups and small businesses, using BigCommerce Backorder from Gritglobal to restock items on demand is extremely important, as they can not shoulder the cost of overstocking.
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Conclusion
The goal of an effective restock strategy is to align inventory levels with demand and supply. Forecasting demand and monitoring inventory levels can help you avoid stockouts and efficiently meet demand. Contact us now!
