The Hidden Costs of Replenishment Triggers

TriggerIt occurred to me, as we worked with a client who runs a high-volume piece picking operation, that many folks neglect how replenishment triggers have a huge impact on the number of replenishment tasks created in a warehouse. A replenishment trigger is the point to which inventory drops in a pick slot to create a replenishment task.  The concept is analogous to safety stock: what minimum inventory level should there be in the pick slot to assure that the slot does not go empty before someone can replenish that slot.

The basic question, then, is the elapsed time between when a replenishment task is created to when a replenishment task is completed.  And, during that time, how much product will the pickers take out of that pick slot?  For example, if the average time between the creation and completion of a replenishment task is one full shift (i.e., 8 hours) then the replenishment task should be created when there’s just inventory to keep pickers picking for the next 8 hours.  Many warehouse management systems allow for the creation of priority replenishment tasks where a pick slot will run empty sooner than the trigger suggests, but the basic concept remains the same.

Too often, folks set their replenishment triggers as a function of the slot type, without consideration of the replenishment timing.  Rules like, “any item in case flow rack have a trigger of 2 cases” prevail even though 2 cases can mean 2 hours of picking or 2 days of picking.  And here’s how that hurts:

  • Consider an item moving 10 cases per week from a case flow rack pick slot
  • With a replenishment trigger of 2 cases, the slot is replenished every 4 days and the trigger gives stockers 1 full day of picking before the pick slot goes empty
  • If the average time between creation and completion of a replenishment task is 1 day, then the replenishment trigger for this item should be 1 case and the frequency of replenishment would be every 4.5 days
  • Over a full year, this item would create an additional 7.2 replenishments for the same shipping volume

That sounds tiny – almost not worth bothering about – yet multiplied across the full range of SKUs it becomes staggering.  At 10,000 SKUs, the entire operation would be generating 72,000 extra replenishment tasks each year.  At  10 tasks per man-hour, this means the replenishment trigger alone accounts for 3+ full-time employees.

It is understandable that between setting replenishment triggers too high or too low, operators err on the side of too high.  After all, running a profitable operation means pickers never hit empty slots.  Still, I suspect most warehouses have set their triggers so high, they are creating more work than they really have too.  And that costs money.

Blog, Distribution Network, Labor productivity, Pick slot, Productivity

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