When to reorder, or reorder frequency, tells us the size and amount of an inventory replenishment order. The most profitable retail businesses know what product the customer wants, how much they will pay for it, and when they want it. Profitable retailers need only get those products into customer’s hands with the least amount of expense. Sounds familiar, right? Ever hear of the marketing term ‘shopper centric?’ Note how many customers bring out a smartphone and scan the price and availability of products? How many times do retailers and the press mention how well Amazon.com operates inventory replenishment in their supply chain?
Amazon.com is very good at identifying the individual products a customer will buy, a bottom-up approach that represents a dramatic change in retail top-down planning. The opportunities for retail inventory replenishment success today are an undivided combination of customer BI analysis and vendor collaboration, resulting in a single tight supply chain. Recent articles concerning Supply Chain Best Practices illuminate this truth even more.
Ivano Ortis, EMEA research director of Global Retail Insights, an IDC company, notes: “The right formula for improving shelf availability at reduced stock carrying costs is the integration of retail demand intelligence [RDI] solutions, where demand forecasting and analytics are core components underpinning inventory replenishment decisions and other core retail processes.”