Inventory Replenishment – What Is It?

Posted by AMS / Wednesday, May 13, 2015

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What is Inventory Replenishment?

If you want to boggle your mind, just imagine warehouse management and movement of inventory in a fulfillment company. A fulfillment company, such as AMS Fulfillment of Los Angeles, manages inventory in over 750,000 sq. ft. of warehouse space, providing pick and pack services for a wide variety of product types that come in all shapes and sizes, and with SKU counts ranging from 5 to 20,000 or more.

The AMS warehouses are outfitted with racking, pick-bin and bulk storage, configured by engineering and maintenance personnel, and customized to create the right environment for each program based on data from the client. A visitor to the warehouses would find footwear, apparel, beauty products, cosmetics, home goods, bedding, industrial supplies and hardware supplies, shelf stable food, perishable or climate vulnerable goods, and much more.  For the AMS clients, the inventory planning process (demand forecasting) establishes the optimal inventory levels that must be maintained to meet expected service levels for demand fulfillment.

This incredibly diverse array of products is received in the appropriate warehouse and stored in preassigned pick locations or upper rack bulk locations (sometimes called up-stock). When an order comes in, it is picked, sometimes assembled, and then shipped. If this isn’t complex enough, inventory levels of each product in the lower pick locations has to be monitored and ‘replenished’ from the ‘up stock’ or bulk upper locations at the right time in order to maintain efficient order and line item fill rates. Overstocking lower pick locations isn’t an efficient use of ‘prime real estate’ and can slow order processing down.

There are a number of other factors to be considered when managing inventory and space allocation that can affect when or how often you perform this task.  Looking at the future of the inventory is important, too.  Are you discontinuing a SKU?  Is the product seasonal? Will you be liquidating or donating old inventory? Do you have new SKU’s soon to arrive?  Answers to these questions help to establish a replenishment program, as well as plan ahead for a year-end physical or inventory reset.

The goal of inventory replenishment is to keep inventory flowing downstream by maintaining the efficient order and line-item fill rates at the pick locations. Doing this requires understanding what products need to flow where, and how much, based on what customers are purchasing. This goal is well met by AMS warehouse personnel and management. While replenishment is a billable service, it is a vital task in the daily operation of a fulfillment company.

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