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Replenishment Cycle

The replenishment cycle occurs between retailers and distributors and involves processes to replenish retailer inventory. A replenishment cycle is triggered when a retailer places an order to restock inventory to meet future demand. Key processes in the replenishment cycle include the retail order trigger which sets replenishment policies, retail order entry which conveys orders to distributors, and retail order receiving where orders physically arrive and inventory records are updated. The overall objective is to replenish inventories at retailers efficiently while maintaining high product availability.

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Madhavan Eyunni
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826 views1 page

Replenishment Cycle

The replenishment cycle occurs between retailers and distributors and involves processes to replenish retailer inventory. A replenishment cycle is triggered when a retailer places an order to restock inventory to meet future demand. Key processes in the replenishment cycle include the retail order trigger which sets replenishment policies, retail order entry which conveys orders to distributors, and retail order receiving where orders physically arrive and inventory records are updated. The overall objective is to replenish inventories at retailers efficiently while maintaining high product availability.

Uploaded by

Madhavan Eyunni
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© © All Rights Reserved
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Replenishment Cycle

The replenishment cycle occurs at the retailer/distributor interface and includes all
processes involved in replenishing retailer inventory. It is initiated when a retailer places an
order to replenish inventories to meet future demand. A replenishment cycle may be triggered at
a market that is running out of stock of detergent or at a mail order firm that is low on stock of a
particular shirt.
The replenishment cycle is similar to the customer order cycle except that the retailer is
now the customer. The objective of the replenishment cycle is to replenish inventories at the
retailer at minimum cost while providing high product availability. The processes involved in
the replenishment cycle include:

Retail order trigger


Retail order entry
Retail order fulfillment
Retail order receiving

Retail Order Trigger.


As the retailer fills customer demand, inventory is depleted and must
be replenished to meet future demand. A key activity the retailer performs during the
replenishment cycle is to devise a replenishment or ordering policy that triggers an order from
the previous stage. The objective when setting replenishment order triggers is to maximize
profitability by ensuring economies of scale and balancing product availability and the cost of
holding inventory. The outcome of the retail order trigger process is the generation of a
replenishment order that is ready to be passed on to the distributor or manufacturer
Retail Order Entry. This process is similar to customer order entry at the retailer. The only
difference is that the retailer is now the customer placing the order that is conveyed to the
distributor. This may be done electronically or by some other medium. Inventory or production
is then allocated to the retail order. The objective of the retail order entry process is that an order
be entered accurately and conveyed quickly to all supply chain processes affected by the order.
Retail Order Receiving.
Once the replenishment order arrives at a retailer, the retailer must
receive it physically and update all inventory records. This process involves product flow from
the distributor to the retailer as well as information updates at the retailer and the flow of funds
from the retailer to the distributor. The objective of the retail order receiving process is to update
inventories and displays quickly and accurately at the lowest possible cost.
Chopra, Sunil and Peter Meindl. Supply Chain Management. 2 ed. Upper Saddle River: Pearson
Prentice Hall, 2004.

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