The replenishment process also has a logic (general)
What is the advantage of warehouse management systems (WMS)?
The ability to automate processes. And yes, the replenishment algorithm, written into the system step by step, allows you to determine whether replenishment is necessary, and if it is necessary, when, where and in what quantity. Warehouse employees only need to physically move the goods according to the task given by the WMS.
Before proceeding to the replenishment logic itself, it is necessary to define the parameters by which it can work. One of these parameters (the main one) is the stock level. Replenishment logic can be activated when a minimum stock level is reached to prevent stock shortages during picking. And most ideally, replenishment logic is activated based on stock balances and planned shipment orders (to avoid stock shortages during picking of shipment orders). It can also be applied when maximum inventory levels are exceeded to avoid overstock and associated costs. Or it can also include stock consolidation, when several cells contain the same product, which can be combined in one cell, if the system is able to do this, then you also need to specify the parameters and steps by which the combination is possible.
The maximum replenishment in the warehouse is determined by the size or volume of goods that the warehouse can hold. The optimal value of the maximum replenishment helps to balance the needs of customers and the available space in the warehouse.
On the other hand, the minimum replenishment in the warehouse is determined by the inventory level at which the replenishment procedure is initiated, i.e. replenishment tasks are created. A sufficient value of the minimum replenishment helps to avoid the situation where items run out before replenishment is done.
In addition, the logic of replenishment of goods in the warehouse may depend on the demand. For example, if the demand for a certain item is higher, the logic may prioritize replenishing it over items with lower demand. This helps to meet customer needs and minimize the risk of product shortages.
The formulas used in replenishment logic can include factors such as average delivery duration, length of safe inventory holding time, service level, replenishment costs, and others.
Minimum inventory level = Average delivery duration * Average demand over delivery time + Safety stock
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Maximum stock level = Minimum balance + Planned sales for the period
Minimum balance = Turnover / Turnover rate,
where Commodity turnover, or sales is the volume of sold products. This indicator is taken for the same period as turnover.
Turnover = Average inventory * Number of days in the period / Turnover for the month
In summary, the replenishment logic in the WMS system in the warehouse plays an important role in effective inventory management. It can be based on various parameters such as inventory level, demand, available space in the warehouse and use formulas to optimize the replenishment process. Implementing the right logic can reduce costs and ensure customer satisfaction.
We will look at "how a WMS thinks" in steps for replenishment and compaction in the following articles.
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