Empowering Inventory Replenishment
3 Factors for Determining Optimal Stock Levels
How fast do products sell? Faster-selling items generally need more frequent replenishment, while slower-moving items might need a more cautious approach. However, it’s important to note that even reliable faster-selling items need support from sales and marketing to keep the stock moving.
How long does it take for suppliers to deliver new stock? Longer lead times require larger buffer stocks, while shorter lead times can allow for leaner inventory levels. Retailers must understand that lead times are subject to change. The last few years have shown that the supply chain can be disrupted by a variety of factors, so it’s worth keeping the chain reliability in mind.
Product Life Cycles
How long will a product be popular or in-season? Items with shorter life cycles, like fast-fashion and trend-bound pieces might need more agile replenishment strategies. But timeless classics have longer cycles, and don’t need as much time and intensity.
Retailers have to keep a close eye on the success of their replenishment processes. The right kind of data can help them identify trends, find and target inefficiencies, and identify opportunities for improvement.
This data is found in the Key Performance Indicators (KPIs). KPIs are essential metrics and here are some of the most common to consider: