What are the Critical Points to Consider When Designing the Replenishment Strategy in my Distribution Center?

Replenishment is basically defined as the process in which the preparation or picking1 locations are periodically supplied to complete their capacity with reserve stock, generally from pallet type locations. If preparation locations are used in the warehouse, they must be stocked regularly. The quantities supplied are based on the total capacity of the preparation location and the quantity of the article prepared for that location.

There are several types of replenishment that you can consider implementing. Some of the most common are:

  • Normal Replenishment: This type of replenishment is the most common and generally works by bringing a full pallet of merchandise from higher rack levels to a first level preparation location. These locations are usually a little larger (usually the difference is in their height) so that the so-called “security mattress” exists and prevent the location from being left empty before the replenishment is completed.
  • Cascade Replenishment: These replenishments occur when a second replenishment can be made from one preparation location to another. For example, the first replenishment is made from a reserve location to a box picking location and a second replenishment is generated from the box picking location to a unit picking location.
  • Replenishment of cherry pick: This replenishment called cherry pick by some software manufacturers WMS (Warehouse Management System), is very useful when you have pick locations in mezzanines that are small lightweight bookshelves or “bines” among others. In this model, a partial pick up of merchandise is made in different reserve locations to consolidate a “mixed pallet” of products and then take it to the pick area to deconsolidate it and fill the picking locations in a logical sequence and route. This method helps reduce both routes and equipment utilization as well as product availability times.

Because of what has been described above, replenishments are definitely a useful tool to complement your daily operations; however, keep in mind the following recommendations so that they do not become a double-edged sword:

  1. For replenishments to work correctly, you must know in detail the information of your ABC products by logistic rotation. The number of visits to the location and the units or boxes dispatched in a certain period of time are key so that the replenishments are generated in an adequate manner. High rotation vs. Very small locations or few locations can exponentially increase the number of refills that you probably will not have the ability to handle.
  2. Assignment of the safety mattress and resupply capacity. It is important to find the right numbers for the so-called safety cushion or reorder point and the amount that will replenish at the location. If the security mattress or the replenishment quantity is very low, it is possible that your location will be left empty before completing the next replenishment, generating delays in the selection of orders.
  3. Take into account the availability of the adequate equipment to complete the refills. The most common equipment used to execute re-stockings are the forklifts, the trilateral and the order picker (for cherry pick), in some cases complemented with pallets for cascade or cherry pick type. If you do not have the necessary equipment to perform all your refills, these can become a stone in the shoe since storage and selection operations will be delayed. If you do not have enough equipment, you can think of different strategies such as generating workgroups to execute all the pending refills before starting the next work shift or the next wave launch (order groups).
  4. Over-allocation or so-called “overallocation”: Some WMS systems provide functions such as over-allocation in which product is basically assigned from a picking location even if the material is not yet there (the replenishment has not been completed). It is important to make sure that even when the order planner has made the launch of the wave, the replenishment has been executed before the selection operator arrives to execute its task. Otherwise, it will have to wait for the replenishment to run or skip that task, which will force it to return later, affecting the flow of the logical sequence of picking and the time of selection of the orders.
  5. If you have implemented a WMS, the implementation of a Slotting module is recommended to optimize the layout of your picking locations, the time of selection and preparation of orders and the replenishments generated.

In a world-class distribution center after picking, replenishment is one of the most labor-intensive tasks, accounting for around 30% of the demand for resources. Replenishments are a very useful tool when optimizing your process flow, but at the same time they must be programmed and executed with due care to avoid inconveniences and negative impacts on the operation.

A selection or picking location is a location assigned to a SKU (usually one location is associated per item, but it is not the norm) to facilitate picking. This location is generally replenished from height or reserve locations.