The Replenishment report provides recommendations for which and how many products need to be purchased. For each product you will also find the estimation of potential lost revenue if you don’t purchase it on time.
Before using the report you should configure lead times and days of stock for your products.
The lead time is the amount of time between placing a purchase order and receiving the products to your warehouse, ready to be available for purchase by your customer.
The days of stock (stock cover) is the period of time for which you’d like to have enough stock available to fulfil orders in this time period.
You can set it individually for each SKU on the Replenishment screen by clicking in the field for lead time or days of stock and typing a new entry.
You can change the lead time and days of stock for all products at once using the “bulk actions” menu.
Set Lead time & Days of Stock by Vendor, for each Warehouse.
This will be applied to all Vendors variants.
To do this:
Browse to "Catalog > Vendors" from the left side menu:
Click on "Settings", beneath the desired Vendor.
You will then see the option to set this for each location in your account.
The Replenishment recommendation for every Variant is based on the Forecast Method & Settings, Forecast Edits, and the replenishment planning settings (lead time and days of stock) for every Variant. Stock on order is also considered, along with when exactly stock is expected to arrive.
Inventory Planner also computes a Replenish Date, the last date when you can purchase without going out-of-stock and missing potential sales. When the Replenish Date is today, an Alert is triggered to signify that you will be missing some sales if you don't purchase it today.
When you click on the Details icon for a particular product,
you will see details related to sales forecasting, such as product sales by the month, average sales, and the forecasted stock information explaining why we suggest that you purchase that amount of units.
The forecast and number of units to purchase are two different numbers. The Forecast metric indicates how many units will sell during the "Days of Stock" period. The Replenishment metric indicates how many units to purchase to satisfy this demand. Replenishment depends on the forecast, your current stock level, number of units you will sell during the lead time period, and the number of products on order.
In the Forecast Settings tab, you can customize the forecast method and settings used to generate replenishment recommendations.
Recent Sales and Trends
This method uses recent sales and stockouts during the Sales Period for Forecast when generating a forecast. Inventory Planner calculates sales velocity and trend based customer orders placed during this time frame.
You can set the date range for Sales Period for Forecast in the upper right corner of the Replenishment report, in Account > Settings > Forecast, in Catalog > Forecast Settings, in the Details icon for any Variant (Details > Forecast Settings), or by selecting Variants and using Bulk Actions > Set Forecast Settings.
For example sometimes you’d like to take into account only the most recent months of sales or some period in the past and ignore all other months. When you change it, you will not see the new forecasting right away, as it takes time to recompute. Click the recompute button and wait until the “recomputing replenishment” message disappears.
The seasonal forecast method refers to the same months in prior years as the sales reference period. This is beneficial for holiday and seasonally driven items with 12+ months of history. Sales Velocity is not a consideration in this case. Trend is applied by evaluating sales over the last 12 months vs. the prior 12 months.
For example, sales from January 2018 and January 2019 impact the forecasted needs for January 2020. If today is December 31, 2019 - the trend will be based on sales between January - December 2019 vs. January - December 2018.
Learn More: Forecast Method & Settings
Another important aspect for the forecasting is related to Past Stockouts. For example if you sold 10 units of product A last month and half a month the product was out of stock, the real demand for this product is 20 units per month.
Inventory Planner tracks stock levels for each product from the moment of installation and knows when the product is out of stock. You can manually mark days out of stock for time before installation. This information will be taken into account by the forecasting algorithm, but if overselling (eg. backorders, preorders) is accepted then it is best to deactivate the "Use Stockouts History" setting. You should deactivate it especially when you allow backorders. In this case if you sell 10 products a month and it’s out of stock in half a month, the real product demand is still 10.
If you don’t need to see some particular Variants, it's recommended to mark them as non-replenishable. If you want to view or make them replenishable again, you can adjust the filter on the top.
The forecast is based on the historical sales and is recomputed by Inventory Planner every day. Sometimes it makes sense to manually override the automatic forecast however to more closely align it with your plans, for example when you plan a marketing campaign.
Learn More: Edit Forecast