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Inventory Management / Optimisation
Inventory Management / Optimisation
5 min read

Key Areas of Focus for World-Class Wholesale Organisations, Part 3 – Intelligent Replenishment (1/2)

Adam Cavanagh
Published on:
January 21, 2021
Based on our work with clients; analysis of the wholesale and distribution sector; and input from expert consultants; we’ve identified the characteristics that define world-class wholesale organisations. This set of capabilities forms an anatomy that sets apart those businesses who are best placed to succeed as we move forward from the turbulence of 2020.

We have formulated a model for potential, based on what we see as the strongest indicators of organisational health across 6 key areas. Strength in each of the elements gives an organisation both resilience (to absorb and manage market and economic pressures) and strength (to outpace/out-manoeuvre competition and act on opportunity).

We’ve looked at the importance of a data-driven approach and the use of advanced forecasting. The next defining feature to consider is intelligent replenishment.

Removing manual tasks from the decision-making process

If the crisis has highlighted anything, it’s the importance of being able to deal with the unexpected. Supply chains are complex even when everything is running smoothly. The ability to keep them functioning in times of upheaval and uncertainty is fundamentally reliant on having strong relationships in place.

When historic patterns of demand change and leave no precedent in place, understanding the future requires:

  • End-to-end communication and shared understanding along the supply chain
  • Being able to exercise judgement
  • Creative problem solving.

Replenishment tasks typically require repetitive administration: extracting data from the system; inputting data to spreadsheets; checking values; updating order quantities; issuing orders. In the complexity created by multiple product lines, suppliers and customers, these manual tasks can quickly become a point of blockage.

Businesses who use too much human resource for these basic replenishment activities, rather than redirecting the focus towards establishing and maintaining relationships along the supply chain will lack the resilience required to thrive. Releasing people from these tasks is less about reducing workload and more about creating the space to carry out crucial high value work.

World-class wholesale organisations – those succeeding even in crisis conditions – have found ways to remove unnecessary effort from activities where decisions can be made automatically. Intelligent replenishment is a core part of this.

Key characteristics

Within each area of the anatomy of a world-class wholesale organisation, we have outlined a series of defining characteristics. When considering replenishment, these traits are as follows:

Automatic replenishment: We have systems in place that can automatically adjust replenishment quantities. This enables our team to manage by exception and prevents firefighting.

The organisations best placed to succeed have removed all unnecessary manual tasks from their team’s workload.

Automatic order quantities: Our systems can automatically generate pre-calculated order quantities for unconfirmed purchase orders. This enables us to better focus our management time.

World-class organisations automate baseline processes to allow human judgement to be applied where it can add value, rather than tying up this commodity in unnecessary processes.

Managing service levels: We perform dynamic ABC calculation and manage service levels according to these classifications. This enables us to maintain optimal service levels with clients without carrying excessive levels of safety stock.

We are going to consider this characteristic in a separate post.

Why it makes the difference

In a world of automated stock replenishment:

  • Spreadsheets are no longer necessary
  • Purchasing suggestions are provided to humans to approve based on updated forecasts and stock levels
  • The team receives alerts for abnormal activity
  • Teams have more control over planning, reducing the need for firefighting
  • Order cycle times can be set up as required.

The strongest firms exploit a system that can execute the tasks that require neither judgement nor creative problem solving, whilst alerting the team to the situations that would benefit from human input. This frees up the team to focus on decisions and relationships that legitimately need their attention, bolstering the organisation’s resilience.

In our experience, it’s difficult for organisations to self-diagnose the key areas where change would have the biggest impact. The diagnostic tool we have created gives you the opportunity to pinpoint priority areas for attention, highlighting specific activities to help you enhance business performance and resilience.

What is the strength and resilience of your organisation? Try our self-assessment tool today.