Replenishment managers play a crucial role in small business inventory management. It is the responsibility of a replenishment manager to determine which goods a company should have in stock, which of them should be available at any given time, and in what amount.
This requires detail-oriented thinking, good mathematical and logical skills, and most of the time the help of good sales forecasting app to provide accurate predictions.
If a replenishment manager finds several inventory problems on his hands, he may have to prioritize and investigate the one that is costing his company more money. He should then identify the source of the problem, work on a solution and implement it. Finally, he can begin replenishing stocks, and then get to analyzing the forecast and tweaking the model, if needed.
During this process, there are several things a replenishment manager should keep in mind.
1. Assess the Relevant KPIs
KPIs (Key Performance Indicators) are performance measurements that indicate the success of a given organization or activity. As you can imagine, KPIs vary from activity to activity. But any replenishment manager should typically look at 3 main aspects.
The first in the status of in-stock products, that is, products currently in inventory or ready for sale. The second is customer service ratio, which evaluates the delivery performance of finished goods. And finally, arrival date, which is the date at which purchased material is due to arrive.
2. Know the Rate of Sale of Each Product
A trustworthy inventory management system can keep your products from running out of stock by automatically placing new orders for products when they are running low. This usually happens when stocks fall below a set threshold. However, this does not mean that this process does not have to be supervised by the replenishment manager.
Other factors like promotions and product seasonality have to be accounted for, although it is true that a reliable sales forecasting app will automatically account for this. Be as it may, the manager should use these tools and adjust the product replenishment threshold as needed, or even the maximum stock levels. He should also keep an eye on ongoing orders and supplier deliveries to make sure the entire process is running in a timely fashion.
3. Align Your Goals with Retail Merchants
If your company decides to go to the retail stores instead of selling to the end user, the replenishment manager has to change his planning accordingly. First of all, he should understand that shelf capacity is limited in retail stores, so all manufacturers are essentially competing with each other for an extra portion.
This gives the replenishment manager an increased responsibility. He cannot let his company lose the shelf space that took so much work to conquer. While doing this, he should maintain optimal levels of stock to make sure the good does not run out, and at the same time deliver enough produce to retail stores to maintain a minimum presentation quantity for the customers.
4. Be Immune to Supplier Irregularities
Small business vendor management is another tricky part of a replenishment manager’s job. While you are counting on your suppliers to deliver your merchandise like clockwork, they have their own issues to deal with and this can cause delivery issues. Maybe they have been bought by a larger group or perhaps they are in the process of changing carriers.
A replenishment manager should account for all of these complications and keep his business impervious to them as much as possible. Successful small business vendor management includes having a good relationship with suppliers, work with them to fix any problems and optimize the delivery process. The KPIs we talked about in point 1 could be useful to help you understand which suppliers are fitting the bill and which ones are below the required standards.
5. Pay Special Attention to Top Items
You may have heard of Pareto’s law, best known as the 80-20 rule. This also applies to small business inventory management and sales in the following way: usually, 20 percent of the items of a company account for 80 percent of sales. In an ABC analysis, these items are usually placed in the A-category.
These A-type items should be the main focus of the replenishment manager. Should he do nothing else but to manage A-products, he would probably get away with it because these are the bread and butter of a company.
So, first of all, make sure that each of these SKUs (stock-keeping units) is stocked in sufficient number. In small business inventory management, an SKU refers to a specific product associated with a particular location. So there may be several SKUs for the same product, as many as there are storage locations. Also, they should be well kept and conditioned properly, and regular audits should be performed in order to protect the company’s market share.