Distribution Requirements Planning (DRP) is a systematic process to determine the optimal quantity of goods required at specific locations to meet anticipated demand.
Distribution supply chains are critical for various types of organizations including Distributors/ Wholesalers, Retailers, Manufacturers, Healthcare, and others.
The profitability of companies running Distribution supply chains typically depends on how quickly they can turn over goods/services through effective supply chain management.
Traditional Approach & Challenges
The task of managing traditional DRP modules becomes fairly complex with larger supply chains involving millions of SKUS moving at high velocity in volatile circumstances.
In that context, many Distribution challenges are related to forecasting accuracy, these include:
- Traditional methods of stocktaking can result in data which is outdated and inaccurate. Inventory forecasting and demand planning become significantly more challenging when stock levels are hard to monitor / lack visibility.
- Seasonal variations in the popularity of certain items can result in over-stocking or outages, often leading to obsolescence and missed order deadlines.
- The order fulfillment lead time needs to be taken into account when ordering new inventory. Just In Time (JIT) approaches to stock management have been proven to be less than effective, creating order fulfillment delays which can result in lost sales and account cancellations. Planners should have a system in place that tracks lead time for each supplier and vendor in order to provide more valuable insights into reorder point planning and rush order requirements.
- Since most new products introduced to the market have no historical sales data, planners are typically left in the dark, which often results in guesstimate forecasting early on in the product life cycle. Predicting the correct stock levels is often challenging and requires frequent analysis.
SCAS empowers planners to avoid forecasting challenges altogether. It does so by autonomously deciding the optimal replenishment moves to make across all products and locations by incorporating:
- Current demand
- Timely inventory status
- Current & past supplier performance measurements
With SCAS, planners can balance demand and inventory at all times while optimizing inventory carrying costs and supply movement costs like never before.