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Auto Replenishment in the Retail Scenario

Auto Replenishment in the Retail Scenario
Auto Replenishment in the Retail Scenario
February 14, 2018


The current Indian Retail Market is highly competitive in nature and hence retailers require tools like Automatic Store Replenishment that provides them with a competitive edge ensuring success in the Indian Retail environment. Majority of the Indian Retailers are continuously aiming to improve Customer loyalty by offering good service. At the same time, they are struggling to reduce the costs in order to stay competitive. This is where Automatic Store Replenishment comes into play.  

What is Automatic Store Replenishment?

Automatic store replenishment refers to a process in retail where inventory is automatically restocked or replenished based on predefined parameters and demand patterns. It involves utilizing technology, such as inventory management systems and point of sale (POS) data, to determine when and how much stock needs to be replenished in stores.

Retailers can set up rules and algorithms that consider factors such as sales velocity, current stock levels, lead times, and historical data to calculate optimal reorder quantities with auto replenishment in retail. This ensures that stores maintain adequate stock levels to meet customer demand while minimizing the risk of overstocking or stockouts.

The process typically involves the following steps:

  • Monitoring and Data Collection: Point of sale systems and inventory management systems collect data on sales, stock levels, and customer demand in real-time or at regular intervals.
  • Demand Forecasting: Advanced algorithms analyze the collected data and predict future demand patterns for each store or product.
  • Reorder Point Calculation: Reorder points are determined based on factors such as desired service levels, lead times, and safety stock levels. These points indicate when stock should be replenished.
  • Automatic Reordering: When the stock level of a particular item falls below the reorder point, an automatic reorder is triggered. This can be done through integration between the inventory management system and suppliers, enabling seamless and efficient replenishment.
  • Order Processing and Delivery: The retail auto replenishment orders are processed and sent to suppliers, who fulfill the orders and deliver the required stock to the stores.

Benefits of Automatic Store Replenishment

In order to understand the role that Automated Store Replenishment in the daily life of a retailer, we take a look at the main advantages ASR has to offer:

Lower out-of-stocks and Higher Sales

When products are out-of-stock, retailers suffer from customers buying elsewhere. As a result, manufacturers suffer from brand substitution and non-sales. Strong brands show more store-substitution and weak brands show more brand substitution.  

Ordering Mistakes are the main cause shortage of stock. It is stated that in-store manual ordering mistakes account for 50% of out-of-stocks and this is something that can be easily solved with the help of Auto Replenishment systems in retail. ASR allows retailers to estimate the inventory levels at the time of delivery with the help of a forecasting system.

  1. Lower Inventory costs and higher margins

    Auto replenishment in retail makes it possible to choose between many different ordering techniques. It is important that Retailers order either Fill-to Minimum or Fill-to-Maximum. Fill-to-Minimum is when retailers order to stay above the minimum stock levels and Fill-to Maximum is when retailers require the shelves to be full.  

  2. Lower labour costs by cycle-counting

    Automated store replenishment in retail helps reduce labour costs since manual ordering is replaced by automatic ordering. Cycle-Counting is a technique of choice to maintain correct stock data. Retailers are no longer required to check shelf stock at each order cycle, instead, the stock levels are counted every 4-8 weeks and compared to database information and hence further reduces the labour costs involved.  

  3. Reduction of price mark-downs

    Fashion retailers plan their budget every season for item procurement and distribution to the stores. Logistics is mainly push-oriented. The leftovers are discounted at the end of the season with high markdowns mainly because they are the least desirable items for regular customers. A system with item-level turnover planning and inventory control makes it possible to monitor sales development from day one. Hence if the price markdowns are started during the season, the overall markdowns will be lower.  

  4. Reduction impulse buying of loss leadership

    Often there is no match between the logistic requirements and commercial requirements. Logistics managers prefer low distribution and low delivery frequencies, and commercial managers prefer low store inventories, low out-of-stocks and high delivery frequencies. The only solution for this is to opt for high delivery frequencies to stores in combination with concentrated deliveries via a single channel. This is a win-win situation for both the stores and logistics. That being said, high delivery frequencies are not sufficient to prevent a costly problem in stores. Hence retailers require Item-level inventory control as a part of the automatic store replenishment system to ensure low inventory levels and low visibility on shelves, in combination with an extra backroom stock.  

The potential results of Auto replenishment in retail are high. Fashion Retailers stand to gain more because they have the potential to cut back expensive price mark-down. That being said, a few factors are critical for retail Auto replenishment systems to be successful, and they are:

  • Data integrity at the start of implementation
  • Developing the correct forecasting and order algorithms and avoidance of manual order corrections
  • Usage of automated store replenishment information for maximum benefits.  

Ginesys One omnichannel suite is one of the retail technology suites to come with ready integrations with Supplymint’s auto replenishment system called DigiARS. It is a cloud-based software that can inform retailers of the requirement of adding and removing inventory for any item or category of stock. The Ginesys Supplymint integration is fully automated and does not require any manual interventions. Hence for retailers looking for a great retail store replenishment solution without a very long time to setup, customize and operate, then Ginesys + Supplymint is the right combination of software.  

Hence retailers require assistance from experienced implementers like Ginesys to ensure that everything is done correctly.