Corporate replenishment | Advantages to Customers, Store management, Company, Suppliers

Corporate replenishment policies

Corporate retail planning relates to formalized logistics policies. The areas of formalized logistics policies include distribution networks, warehouse system, information systems and replenishment systems.

Formalized logistics policies permit the head office of a retail organization to be responsive to operational needs. Companies have invested an enormous amount of fixed capital on warehousing, vehicles and other equipment. Apart from fixed assets, the current assets in the form of inventory, accounts receivable and cash also form a substantial part of investment.

Thus, corporate replenishment has become an integral part of the corporate strategy. It is instrumental to the achievement of financial and strategic objectives.

Corporate replenishment policy is broader in its application. It is based on the organization’s replenishment ethos related to a systems approach.

Types of Stock Control Systems

There are two types of stock control systems:

i. Push strategy; and
ii. Pull strategy.

Under the push strategy, the quantities of stock are pushed into stores in anticipation of demand. Under the pull strategy, the merchandise is pulled through the supply chain to replenish sales at stores and a minimum stock holding is retained in the store.

In the 1990s, just-in-time (JIT) methods were developed. In these methods, the pull strategy became the leading method to link inventory to actual demand. Accurate electronic information from the use of EDI has enabled the achievement of continuous replenishment system.

The JIT systems allow for restocking to occur in relation to customer demand. In retailing, the fundamentals of JIT are known as quick response. Demand is captured as close to the final customer as possible. Quick response is actually a series of technologies which comprise the electronic scanning of product codes, the application of EDI and tracking of goods in the supply chain. Grocery multiples are the main users of quick response.

Advantages of corporate replenishment

Advantages of Corporate Replenishment

Image: Advantages of Corporate Replenishment to Customers, Store Management, Company, Retailers

Corporate replenishment results in advantages to Customers, store management, the company, suppliers.

Advantages of Corporate replenishment to customers

1. Goods are available at the point of sales where and when the customer needs them.

2. An item advertised in the media is certainly available in stock as stock is assured through the system. This adds to customer goodwill.

3. The economies of scale and inventory savings available to retailers are passed on to the customer. The retailer is able to forecast bulk buying requirements more accurately. Hence, the retailer is able to obtain greater discounts from suppliers. A part of the savings can be passed on to customers.

Advantages of Corporate replenishment to store management

1. With well designed corporate replenishment, the management is relieved from the botheration of stock checking and ordering. Use of automatic stock replenishment has completely freed the store management from stock ordering worries.

2. Store management has more time to manage resources and implement company policies. Computerized goods receipt system has saved the time spent on inventory management.

3. With the use of automated systems, managers will not worry about stock position. But they should ensure that stock counting is accurately recorded. Stock outs occur for reasons such as unpredictable shifts in demand, product unavailability, poor data capture control, loss of information, computer failure etc. In these situations, managers should communicate major stock outs immediately to the head office.

The automatic stock replenishment system merely removes the task of physically ordering stock. It does not relieve the manager from the responsibility to ensure maximum customer satisfaction through product availability.

Advantages of Corporate replenishment to Company

1. The company benefits from maximizing service and minimizing costs. Inventory replenishment is managed to keep the amount of stock to an acceptable level, it avoids dead stock in which capital is locked up unnecessarily.

2. Minimum stock holding prevents capital from being locked up. Capital may be employed for the expansion and development of the business.

3. Due to effective control over stock holding, floor space required for warehousing is reduced. This enables the store manager to divert floor space for selling activities. In a self service environment, products are displayed by making effective use of floor space.

4. Stock will be allocated and received into stores to coincide with advertising and other sales promotional activities. If advertising products are not available in stores, it is a major fault on the part of the retailer.

Advantages of Corporate replenishment to suppliers

1. It is easier for a supplier to cope with one order for all stores of a chain than order for each store independently.

2. The supplier can affect delivery of goods in the most economical way.

3. Using traditional forms of ordering is both time consuming and inaccurate. Processing orders for central distribution warehousing is quite easy for the supplier.

4. Only expert buyers place orders on behalf of store management. From the supplier’s point of view, it is preferable to deal with buyers who have expertise in the field of buying.