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Replenishment: The Hidden "Traffic Cop" of Distribution Operations

Mike Prince | 27 February 2020

Tour just about any distribution center and what is the focus of conversation?  Picking.  And justifiably so, as most of the equipment spend for today’s “ground up” distribution centers (DC’s) goes into picking systems – Goods-to-person systems, pick modules, put walls, robotics, automation, etc.  This is where the industry is heading and this is a good thing, as it makes operations more efficient than those running the systems and methods of the past.

While these systems get the airtime in trade magazines and tours, the fuel that makes the engine run is the flow of goods into them, or replenishment.  Without a solid, well-designed replenishment strategy as part of a fully integrated operation, these systems often struggle to operate at their optimal level.  So, the question is, what are some “tricks and tips” to maximize the efficiency of a replenishment process?

Picking and replenishment are joined at the hip

Any design of a pick solution typically starts with an analysis of how much inventory needs to be available for picking at any given time (days of supply).  Without this we are shooting in the dark, as media selection depends on this key metric and drives replenishment frequency (which in turn drives labor requirements).  These two components work in harmony and should be designed that way.

Design is a combination of trade-offs

When designing the replenishment operation, it is important to not think in a vacuum.  While one train of thought would be to minimize replenishment frequency by situating a high level of inventory at a given pick facing, the corollary train of thought is that pick locations are typically situated in “prime” locations of the warehouse, and this space is at a premium. The goal should be to find a solution which is the best overall, not the best for picking or replenishment on their own.

One size does NOT fit all

Any replenishment strategy must be tailored to both the picking solution/media as well as the throughput velocity of the items in it.  A single case may be ten minutes of supply for one SKU, and ten years for another.  Applying the same rule/design to both SKU’s results in two completely different results.  Normally this results in stratification of the pick inventory, with faster movers effectively having the least number of days on supply in picking, with slower movers having the most days of supply while minimizing their footprint in picking.

Touches = time & labor

Replenishment should be process-mapped like any other warehouse process, to ensure that the cycle is efficient.  Flow of goods from the reserve inventory location to the pick face should be analyzed and streamlined to arrive at an optimal cycle time.  Roles should be clearly defined in the process to eliminate confusion and delays.

Emergencies?  We don’t need no stinkin’ emergencies!

A popular method is using the order planning/release process to drive replenishment tasks based on planned orders/demand to ensure sufficient inventory is available to pick.  A more efficient process is to use a “min/max” methodology based on real-time pick slot inventory, where the “min” is based on a days of supply metric and the replenishment quantity (“max” – “min”) is based on a unit load in the warehouse (example, a case or pallet multiple).  This keeps locations more efficiently “topped off” to their optimum levels and avoids “emergency” replenishments which are common in wave-based replenishment strategies.  Another bonus is that top-offs can often be done off-shift, minimizing replenishment interruptions during the picking process.

Location, location, location!

This real estate mantra also holds true for the warehouse.  Whenever possible/practical, reserve inventory should be as near as possible to the pick location(s).  This will shorten travel times and improve replenishment cycle times.  This is often not difficult to manage depending on the pick design; floor-based pick locations should use upper locations for reserve, and often pick modules can have a dedicated “forward” reserve area close by for faster moving products.  In goods-to-person systems, storage is often one of the cheapest components to add and in some cases a GTP/Shuttle SKU may have much more inventory stored in the grid structure compared to a traditional picking configuration.

Hopefully this discussion has helped to emphasize the role of effective replenishment as a vital cog in the distribution/order fulfillment machine.  The best news is that any operation can use many of the tips above to assess its replenishment effectiveness and identify areas of potential improvement.

Author: Mike Prince

Mike Prince is a Senior Consulting Engineer in the Bastian Solutions Consulting division. In this role, Mike leads client designs and engagements across many Bastian practice areas. Mike has more than 30 years of technical and leadership experience working across the Supply Chain and assisting clients in achieving their strategic and operational goals.


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