LinkedIn Twitter
HAVE INVENTORY IN THE WRONG PLACE?

Improve Your Inventory Position across Multiple Warehouse Locations

Does managing inventory across multiple warehouses give you “inventory anxiety?” Do you spend a lot of time worrying about whether you have enough stock where you need it? Are your warehouses often overstocked on some items, but understocked on others?

Managing your inventory across multiple warehouse locations doesn’t have to be a gut-wrenching experience.

Absolute Value Demand Planning defines SKU’s (Stock Keeping Units) as a particular item in a particular warehouse. The system helps you deploy your stock to the right warehouse with the right quantities, based on the SKU’s respective forecast and time-phased expected inventory.

 
 

Buy More Economically and Improve Customer Fill Rates in all Locations

The challenges involved in synchronizing all your incoming and outgoing inventory grows exponentially when there are multiple warehouse locations involved. The key is to use a system that allows you to see and manage inventory in each location and across all locations at the same time.

With the Absolute Value Demand Planning system buyers are presented with the availability of surplus quantities by warehouse, and can choose to transfer all, part, or none of the quantity to balance their inventory across the supply chain.

Each warehouse or location can function as a hub or a spoke by item. This allows factors such as proximity to customers, shipping costs, and best vendor values to all to be considered when determining a hub or spoke location for items. It also provides maximum flexibility to optimize your purchasing and best handle customer fill rates.

Hub & Spoke Replenishment:

A more accurate approach

Commonly referred to as “transfer replenishment,” “central warehouse,” or “distribution center replenishment,” hub & spoke replenishment offers another strategy for managing your inventory across multiple warehouses. It involves designating a hub distribution center that receives and consolidates products and then sends them directly to other warehouse destinations.

Many systems use hub & spoke replenishment processes, but most of them don’t handle making the purchase and transfer suggestions for a complete hub & spoke set up. Typically, they have a hub and three or four spokes, and they will do a good job of buying what you need at the top, but they neglect to do a good job in terms of letting you know how much stock you need to transfer down to the spokes, and when to transfer it.

Some demand planning systems develop forecasts at each of the warehouse locations and add them together to get to the top warehouse location (the hub), and declare that is the total forecast.

At Absolute Value we do it differently. We roll up the history, and create a forecast at the company level, where a more accurate and statistically valid forecast can be made by considering the rolled-up usage. This technique enables you to take advantage of vendor minimums at the hub level, no longer forcing them at each spoke warehouse location.

We can also allow you to make any warehouse the hub for any item. The same warehouse does not need to be the hub for all product purchases.

If you have experience with small or remote warehouses, you know they don’t necessarily have consistent usage. To achieve more consistency and accuracy, Absolute Value’s Demand Planning system takes a unique approach to hub & spoke replenishment. Rather than rolling up the forecast from the spoke locations, the system rolls the usage history up through the replenishment path for purchasing or manufacturing at the top level.

The system creates a forecast at each level, but it relies on the forecast at the top for buying or manufacturing planning.

 

Why Hub & Spoke Replenishment?

  • Achieves much better accuracy due to a larger sampling of multiple locations’ usage history
  • Offers the flexibility to set up a replenishment path down to the SKU or spoke level
  • Allows any warehouse to function as a hub for any item
  • Creates inventory balancing transfer orders periodically, so the system can move inventory back to the hub, if needed, versus buying more inventory
  • Reduces the stress involved in trying to choreograph where and when the inventory should be moved
  • Enables savings due to meeting vendor minimums at just one location for each item
  • Consolidates purchases to potentially qualify for greater discounts with a vendor

Unsure About Hub & Spoke Replenishment?

Hub & Spoke doesn’t have to be complicated. Check out these Quick Tips.

FIND OUT MORE

Manage Your Inventory Across Multiple Locations: