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30% revenue boost – how?

The use of a Vendor Managed Inventory solution (replenishment) for brand manufacturers in indirect sales enables a significant increase in sales with VMI while reducing POS inventories at the same time.

Aug 2022
Increase sales, Umsatz steigern, Reduce costs
Umsatzsteigerung mit VMI, , Boost revenue with VMI

Boost revenue with VMI for brands

How Exactly does Replenishment Boost Sales?

Inventory management in retail could be an extremely time consuming and frustratingly difficult task. However, with the help of a good vendor managed inventory (VMI, Replenishment) solution, there could be great improvement in efficiency and cost-reduction. Continue reading how to boost revenue with VMI.

What exactly is automated replenishment?

Automated replenishment is the system by which a solution uses smart algorithms (Artificial Intelligence powered) based on real data and analysis of critical metrics to properly assess the actual demand across various channels. Thus, the replenishment process is triggered by real demand for the product.

How does automated replenishment really work?

As mentioned above, the automated tool utilizes real time data and certain metrics to assess the optimal re-order level. These inputs have to work together with extra analysis to really provide informed replenishment systems.

Some of these metrics could be:

  • existing stock in inventory warehousing
  • stock on the retail shelf
  • average or expected daily sales
  • necessary lead time
  • stock already on order
  • stock already in transit
  • supply chain limitations (allocation)

These figures constantly updated real time or daily can then be analyzed by the software.

Some things such a system could do then are:

  • assess optimal re-order level
  • determine best quantity to order
  • automate the reorder process

The system will then be able to facilitate the replenishment process with informed data and can automatically initiate stock movement from warehouses / distributors to the retail shelf. Of course, there can be check systems in place so that supervising employees can review and approve first.

Therefore, time spent previously on sitting and analyzing stock levels and manual replenishment will be saved as the system would have already come up with an efficient way to replenish the entire supply chain. It is an innovative and efficient way to run your business.

No, this does not mean that robots and artificial intelligence will completely take over. You as executives are always still in charge. Decision making is always ultimately yours, and you can choose how many manual checks and balances you wish to be in control of. Human intelligence is not obsolete and is still an essential key part, but automation can cut out some of the more repetitive and uninspiring aspects of the supply chain process, as well as optimal data gathering. You decide how much you want to release the reigns.

What are some benefits of an automated replenishment system?

Some main benefits of such a system are:

  1. Increased good reputation – with minimization of under-stocking/stock outs you can increase customer satisfaction. Satisfying the customers demand needs will increase the brand’s image, which is key to customer repurchasing and revenue generation.
  2. Improved efficiency – when purchasing decisions are done based on more accurate and up to date information the supply chain can run smoother and retail shelf space will be freer for more offers.
  3. Increased revenue generation – revenue will be a result of the efficiency optimization because the brand will not miss out on sales from events such as stock outs, capital will not be tied up in overstocked inventory that could end up needing to be sold at discounted prices. Additionally, return on capital will be optimized with proper inventory levels.
  4. Identify anomalies and challenges – with the up-to-date collection of data, executives can better apply human knowledge and experience to understand trends, areas of issue, and anomalies within the supply chain process.

Always strive to optimize tasks and save yourself from boring, unfulfilling mundane tasks and be more productive where your experience, generate more sales with replenishment and knowledge can be better utilized.

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Peter Krebs

Director Customer Success