Inventory Management Features: Replenishment Parameters

It’s time for another Inventory Management Features post! The topic for the day is Replenishment Parameters. So, let’s dig in.

Parameters, concerning with restock, are a must-have feature in any Inventory Management System (IMS). They form the foundation of your fulfillment and replenishment operations. Knowing when you need to re-stock your inventory will never cause a late order again.

The three main parameters that go into inventory planning are:

  1. Maximum Inventory
    This sets the maximum number of units to keep in your inventory for a given item. The level varies from one company to another based on their requirements and scale. For example, small products with a high use like nuts and bolts may have a higher max level. On the other hand, products that don’t sell or get consumed too often will tend to have a lower level.
  1. Minimum Inventory
    This replenishment parameter sets the level of minimum inventory that you want for your stock. Again, this limit can be different for  companies. If the stock goes below the set quantity, it can cause problems in meeting customer demand.
  1. Re-order point
    As the name suggests, this point states when an item reaches a certain stock level, it needs a replenishment order. There is generally a re-ordering policy that is used to determine this point.
    For example, two common ones are Maximum Inventory and a Fixed Re-order Point. In the first one, you re-order stock when the level drops below the set min quantity. In the latter, you set a different re-order point. Once the on-hand quantity is less than that, you know it’s time to order more.

Replenishment Function

These three factors direct the replan function in an IMS. Based on the min, max, and re-order points, you should decide when to order more inventory. The aim is to align your stock levels with the inventory status to avoid undesirable situations like stock-outs or over-stock. In fact, your IMS should notify you right away when an item is below its minimum level. Once it does, you can create purchase orders to stock up. But, a robust system will go one step beyond and send those orders out automatically.

In conclusion, replenishment parameters can improve your inventory management. It is important that you consider, and use this feature to its best potential in an IMS. If you have one thing less to worry about, you will save time as well as deliver excellent customer satisfaction.


Looking to learn more about Replenishment Parameters? Click here to see how Clear Spider can help.