A replenishment system's purpose is to place the right amount of inventory at the right place at the right time. It's a basic problem yet requires complex execution. Over the years, product explosion, location additions and contractions, omnichannel shopping, and fulfillment option expansion have made replenishment challenging. And while there has been technological assistance, additional automation, and process refinement, they've all been building on the same premise of adjusting service levels, order points, up-to points, and mix/max guardrails. It's time for a new approach.
Retail and CPG companies struggle to balance investments that remediate short-term pains and improve long-term resiliency. Disillusionment over prior investment payoffs, plus being in constant crisis mode, has supply chain executives focusing on fundamentalssuch as efficiency improvements and cost containment.
Retail and CPG companies have challenges with inventory uncertainties and workforce shortages driven by supply disruptions, inflation, low unemployment, and shifting consumer demand. Yet to improve productivity and results, two words are often thrown out as the solution: Automation & Insights. But they often ring hallow.
It's time for some good news. Labor productivity grew by 2.2% annually between 2020 and 2021, up from a 0.9% average annual growth from 2011 to 2019. Before attributing this to people working more hours, labor productivity is measured as the output per worker hour. Hence, people are becoming more efficient.
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