The challenge for supply chain management is to have the optimum amount of inventory (just enough to provide the desired service level) in each warehouse by managing replenishment.
Typically, there are three approaches to replenishment – push, pull, and distribution requirements planning (DRP).
In the push approach, central supply (the plant) manages replenishment. Push has good visibility but the plant is furthest removed from the source of demand (customers) so will likely fall short on customer service at the lowest levels of the chain. In a pull system, replenishment is triggered by orders from the bottom of the chain ‘pulling’ inventory from the next tier, which in turn orders from its supplying warehouse, on up to the plant. DRP is a time-phased, forecast-based replenishment approach very similar to MRP, with the distribution network structure providing the connections rather than the bill-of-material.
While all of these approaches are viable, each has its strengths and challenges. To learn more about each one, and solutions for effective management, visit the Advanced Supply Chain news blog.
The 2013 Brown Smith Wallace Distribution and Manufacturing Software Guides are currently available for download. The 2014 edition will be available in April, 2014. Please contact snelson@bswllc.com for more information.
You can also request these guides, as well as all other materials, via our website: http://www.
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