Optimal Supply Chain Operating Strategies by Replenishment Stream

Abstract

In the world of consumer packaged goods (“CPGs”), not all demand is created equal. While Base Demand typically comprises anywhere from 50 – 80% of day-to-day volume, other demand profiles, or replenishment streams, make up the delta. For the purpose of this project, demand patterns for five replenishment streams (Base Demand, Incremental Business Activity, Promotional Activity, New Initiative Phase-In, and New Initiative Phase-Out) were analyzed to determine if and how operating strategies from an inventory, planning, and distribution perspective should be adjusted to maximize end customer service level for a newly launched personal care product. While for certain operating strategies (i.e. inventory) it was found to not be feasible to strategically align processes around replenishment streams, there could be both a financial and operational benefit to align certain processes for planning and distribution with certain replenishment streams.