Replenishment and Supply Chain

Value chain management rests on fundamentally simple questions, which are ultimately difficult to answer: How much of a product should the store order? When should the order be placed? Which products should be ordered? Retailers carry many thousands of products, in hundreds of stores. Beyond the vast number of SKU’s and product categories, any system must take into account the complex interrelationships between these products, as well as the variables that affect demand and the constraints placed on orders, including limited shelf space, transportation schedules and capacity.

 

The promise of automated replenishment is intriguing – straight out of science fiction – “Imagine a world where orders are created for you, freeing you from the monotony of writing orders several times a week. These orders will be perfect, since they will use past sales to predict future movement.” The reality, however, is more like the Stone Age. Setting up your replenishment system is tedious and complex – your people must constantly monitor dozens of parameters every day, making the task more and more frustrating. These “house of cards” systems eventually collapse under their own weight. At Tango, we consider these systems semi-automated replenishment at best.

Why is a solution so hard to come by? What factors must be taken into account in order to optimize product management? In our opinion, managing the value chain comes down to one principle, what are you trying to accomplish with your replenishment strategy? We want to help.