Logistics, Trade Administration and Supply Chain

When retailers managed inventory, one of the methods for inventory control was to use some form of a trigger-point method replenishment program. That is, when an item in stock is depleted to the level of the trigger point quantity, a purchase order is placed on a vendor to replenish the item. In such systems, retailers make their own forecast and inventory control rules. Alternately, retailers will replenish on a fixed cycle i.e. once a week basis and order an amount to fill designated shelf space for an item. According to the International Mass Retail Association, over 60 percent of hard goods and almost 40 percent of soft goods are under replenishment programs managed by retailers. Although retailer-managed replenishment programs are expected to continue, there are also expected to be a substantial growth in vendor-managed inventory (VMI) that is continuous replenishment. With electronic data interchange (EDI) and point of sale data, vendors can be as aware of what is on the ret...

Order Fulfillment: Another activity area that logistics may control is order fulfillment, which generally consist of activities involved with receiving and completing customer orders. Initially, one might question why the logistics area would concern itself directly with order fulfillment. However, one important physical distribution factor is the time elapsing from the time when a customer decides to place an order for a product until the time those goods are actually delivered in a satisfactory condition, i.e. the lead time. Forecasting: Another activity essential to the logistics area is inventory forecasting. Accurate forecasting of inventory requirements and materials and parts is essential to effective inventory control. This is particularly true in companies using a just-in-time (JIT) or materials requirement planning (MRP) approach to control their inventory. Logistics personnel should develop forecasts in those situation to ensure accuracy and effective control. Too fre...