What are the most effective replenishment strategies for slow-moving products?

Demand variability is a key challenge in modern retail supply chain management. To handle slow-moving products effectively, combine a reliable forecasting tool with a strong service level strategy. Methods like safety stocks and cycle stocks, influenced by lead times, delays, order frequency, coverage windows, and order quantities, impact inventory management for desired service levels. In summary, for slow-moving items, achieving high forecast accuracy is essential, but an optimized service level strategy is equally crucial to minimize stockout risks.

When replenishing for slow-moving products, it is critical to understand the past and current sales accurately. There are a few ways to determine future needs such as seasonality of the slow-moving product(s), historical sales, YOY trends, and holiday seasonality. Having access to historical sales data will allow for proper future forecast needs more accurately. In addition, factoring in growth % to ensure there is enough inventory. However, if its for a slow-moving product, passive demand forecasting will be the most effective strategy.

Accurate demand forecasting and planning are essential for managing slow-moving products. Use historical sales data, market trends, and customer insights to forecast future demand. This allows you to plan replenishment quantities more accurately, avoiding overstocking or stockouts.

It require, strategic approaches to Implement demand-driven ordering, adjusting replenishment based on actual sales rather than fixed schedules. Set up automated systems to track inventory levels, triggering reorder points for timely restocking. Utilize dynamic safety stock levels to account for variability in demand. Close collaboration with suppliers, ensuring efficient restocking. Consider bundling slow-moving items with faster-selling products to optimize inventory turnover. Regularly review and adjust replenishment strategies based on changing market conditions and product performance. In real time scenario, many companies bear losses in long term in absence of proper liquidation plan for slow movers from the buying and planning stage

Para resolver esse problema, o ideal seria fazer a categoriza??o dos itens e classificar na curva ABC. Depois de ter a defini??o dos dados, é só montar um gráfico de pareto 80/20 que irá mostrar os resultados.

To replenish slow-moving products there is two new models namely the probabilistic demand model (PDM) and the demand size-based model (DSBM) have been developed in this work by modifying Croston's model. The probabilistic demand model (PDM) has been developed by considering actual probabilities in the demand size per period and the demand size-based model (DSBM) by directly estimating the demand size without any average per period considerations. A comparative study with the commonly used demand forecasting methods shows that the models follow close approximations to them and are versatile with different values of smoothening constant.

FSN is a better approach to ABC. It calculates the average stay and consumption rate: Average stay represents how long a product stays in storage, found by dividing cumulative days of inventory by the opening balance and goods received. Consumption rate is the total number of products distributed divided by the inventory period's total days. It helps to categorize products: Fast-moving items have ≤10% on average stay and account for 70% of the consumption rate. Slow-moving items have ≤20% on average stay and make up 20% of the consumption rate. Nonmoving items have ≤70% on average stay and comprise ≤10% of the consumption rate.

As it relates to slow-moving inventory, finding ways to stimulate demand and increase the rate of sale is most important. A critical component is knowing the lift you can expect to achieve from each tactic along with the overall margin impact to the business. This way you can develop a strategy to move through the inventory in the most profitable way.

The strategies outlined in this article are important to consider regardless of whether they are slow-moving or fast-moving. Understanding which products are most important to your business and keeping them in stock is a critical aspect of inventory planning and management.

Another aspect is how you are managing your inventory and replenishing it from back stock. I believe First In First Out (FIFO) is usually the way to go, especially with perishable items. If something has an expiration date you definitely don’t want it to continually get pushed to the back. When that happens too many times the item may expire and you will have to damage it out, decreasing profitability. Also packaging, SKU’s, and price associated with the new SKU’s can change. To stay consistent with the marketing strategy it can be important to sell the older product first.