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What’s at the heart of an effective replenishment system?
Many companies are now switching from a Forecast Driven Supply Chain to a Demand Driven Supply Chain (DDSC) to improve both product availability as well as product freshness.
DDSC thrives on Demand Sensing and an effective Replenishment system. The heart of this replenishment system is the way inventory norms are set at various nodes. It should be dynamic to reflect the emerging demand patterns. It should also adjust quickly if the demand is either accelerating or decelerating, thereby reducing demand latency.
Supply Chain teams taking a short cut in fixing the inventory norms often make it static through the month, ignoring demand shifts and cyclicity during the month. Switching to dynamic norms does wonders to reduce stockouts as well as surplus inventory.