This POST marks the beginning of a series of articles related to the analysis of Retail problems connected with the supplying of shops. The author of the article has dealt with the issue in various businesses by using a number of software solutions.
The problem of Replenishment in Retail is linked to the construction of a system that can get the right references with proper quantities onto shelves. There is a double aim here: minimize working capital and maximize the quality of service.
This is easy to say but difficult to do given the incredible number of books written on the topic and creations of software applications. Let us now see all the aspects of the issue.
The Replenishment System is made up of the following components:
- System to define range and depth of selection. This component is one the most important in the construction of the entire system, since it defines what goods and how many goods there must be in a shop. We will see how retail businesses are always accurate when they have to define the range of selection of goods, however at times they let replenishment define the depth of selection.
- Demand planning. This component must estimate the reference demand in a given shop in a predefined time (for example, next 30 or 60 days). In some cases, this is a fundamental piece of information because the quantity of goods that must be delivered to a given shop can vary according to variations in sales. We will see, however, that mechanisms that do not require a careful analysis of the demand of goods can be activated.
- Automatic allotment systems of goods. Once established, which goods go to a given shop, it is necessary to issue delivery orders that follow internal logistics (goods that come from one or more internal distribution centres) or external logistics (suppliers provide direct delivery). When there is a “shortage”, that is when goods are not sufficient, this component has to decide where to send available goods in the most rational way as possible.
- Complementary allotment systems. If there is anything new, that is new campaigns, promotions, events, public holidays and the opening of new shops, the replenishment system must be supported by an automatic allotment system of goods led by the main headquarters and not by automatic calculations. These mechanisms however must go hand in hand with those of automatic allotment so as to avoid irregularities and overlapping.
- Coordination system between shop replenishment and central storage replenishment. The acquisitions office must have an overall perspective of current and future availabilities of goods in the network so as to issue acquisition orders correctly and timely.
- Reporting. The offices that coordinate acquisitions and logistics have to be in the condition to constantly keep system performances under control.
- EDI flows. It is unthinkable for a medium-sized business to manually operate the flow of data to storage, suppliers and shops. An automatic replenishment system needs to be integrated at various levels:
- Register of goods: information on products must be assimilated as automatically as possible;
- Price list: Prices must correspond to the given invoice;
- Orders: to suppliers, whether storage delivery or direct shop delivery;
- Transport documents: The consignee must be able to confirm proper delivery or protest for improper content delivery instantly on video;
- Invoices: There must be an automatic accounting management that also includes the management of the requests of credit slips.
In the following Post we will examine one of the above-mentioned aspects in depth. We will discuss feasible approaches as well as organizational and technical choices that are at the disposal of businesses.
