Understanding the replenishment timeline is essential for ensuring that products are available in-store when customers want them, while also avoiding overstock. This timeline outlines the end-to-end process of how inventory is forecasted, ordered, delivered, and displayed, as well as how future demand is planned.
Timeline Breakdown
1. Before the Arrival of Current Replenishment
- Previous Weeks Used for Forecast (X):
Replenishment planning begins by analyzing historical sales data. The forecast model uses a defined number of previous weeks (X) to predict future demand. - Picking & Packing (Warehouse):
Once the forecast determines what is needed, the order is prepared at the warehouse. This includes picking the right quantities and packing them for shipment. - Transport:
Goods are then transported from the warehouse to the store. This step varies in duration depending on geographical and logistical factors. - Store Display:
Upon arrival, the products are unpacked and displayed in the store, making them available for customers.
⏳ At this point, the current replenishment has arrived in-store.
2. Planning Horizon (Y) – Until the Arrival of Next Replenishment
- This phase covers the time until the next replenishment is scheduled to arrive.
- It is essential to forecast demand accurately for this window, known as the Planning Horizon (Y), to ensure stock coverage.
Forecasting in the Timeline
Stock Forecast
This is the projected stock level at the store at the moment the next replenishment is due to arrive. It takes into account:
- Current stock levels
- Ongoing sales
- In-transit inventory
Demand Forecast
This represents the expected sales during the Planning Horizon (Y). It helps define how much stock is needed to meet demand without falling into stockouts or overstocks.
📌 Goal: Ensure that Stock Forecast ≥ Demand Forecast by the time the next replenishment arrives.
Replenishment Cycles
Each replenishment follows a cyclical pattern, repeating the process of calculation, shipment, and stock coverage. The diagram below illustrates how multiple replenishment cycles overlap in practice:
- Replen. n-1 → Replen. n → Replen. n+1
- Each cycle starts with the replenishment calculation, followed by the lead time (time needed for preparation, transport, and store display).
- Once stock from the current replenishment arrives, it is expected to cover sales until the next cycle is completed.
Key Concepts:
- Lead Time
The period between when a replenishment is calculated and when the stock physically arrives at the store. It depends on the logistics setup between each warehouse and store. - Planning Horizon
The period after a replenishment arrives during which the delivered stock should cover expected demand. It should be at least equal to the replenishment cycle to avoid stockouts. - Coverage
The number of days (or weeks) the received stock is expected to last, based on predicted sales velocity. - Stockouts
Occur when actual sales exceed forecast or delays affect the timely arrival of goods. Monitoring real stockouts helps fine-tune the forecasting and lead time assumptions.
🔄 A well-balanced replenishment cycle ensures continuous stock availability without overloading stores with excess inventory.
Why This Matters
Managing the replenishment timeline and cycles effectively ensures:
- Consistent product availability on shelves
- Optimal use of warehouse and transport resources
- Lower inventory holding costs
- Better alignment with real customer demand
Key Takeaways
- Replenishment is not a one-time event but a recurring cycle.
- Accurate forecasting, realistic lead times, and coverage planning are essential to avoid service disruptions.
- Continuous monitoring and adjustment are required to align forecasts with actual sales and lead time performance.
