Replenishment 201: Monitoring Store-Level Inventory

Learn about:

• How a product is determined to be replenishable.

• How to measure instocks.

• What "in pipe" means.

• Define pack sizes and how they affect your replenishment.

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What Are Traited and Valid Items At Walmart?

In order for an item to be considered replenishable in Walmart's system, you'll need to check the order book flag, item status, effective date, MBM code, and positive forecast.

It's also important to note the difference between traited and valid items. An item can be one and not the other or both.

• Traited: when an item is chosen by the buyer to be put on the modular, it is considered "Traited".

• Valid: when an item is actively replenishing, it is considered "Valid".

• Traited and Valid: the item is on the modular and is being replenished at the store.

• Traited Not Valid: the item is on the modular but is not replenishing because the store manager might decide not to order the item for her store due to reasons like low sales, too many returns, too much inventory, etc.

• Valid Not Traited: the item is not on the modular, but the store manager orders it due to customer demand at her store. 

Products are usually traited for certain stores depending on their likelihood of high sales performance. For example, if a store is next to a beach, then bathing suits would likely be a traited product there and may not be so at a store located inland. It's important to keep track of your traited and valid store counts to ensure you have sufficient inventory to cater to these stores (and especially if the store count changes). 

How To Measure Instocks

Instocks are an incredibly important metric to keep track of as well. There are three instock metrics to keep in mind:

• Current Instock Percent: measurement of valid stores that have at least one unit on hand.

• Current Replenishable Instock Percent: measurement of daily forecasted demand against current on hand store inventory. Does the store have sufficient inventory to meet today's forecasted demand?

• Instock by Week: measurement of historic instock percent.

These metrics will help you examine your instocks on a corporate level. Walmart has a corporate instock goal of 98.5%, though there are some minor variations between departments. If you fall below your departmental instock goal, it's time to look under the hood and see which stores are having issues.

What is "In Pipe"?

There are four things you'll need to check in order to get a full picture of your replenishment cycle. Each of these statuses counts towards what's "in the pipe".

1. Store On Hand (OH): This is the number of units actually in the stores.

2. Store In Transit: This is the number of units that are traveling from the Walmart distribution centers to the stores.

3. Store In Warehouse: This is the number of units currently in the Walmart distribution centers that have been allocated for stores but have not been shipped yet (i.e., they've been picked). 

4. Store On Order: This is the number of units that are currently on order for a specific store from the supplier.

If you see that you have no OH units and nothing on the way (in the pipe) for certain stores, you'll likely need to start doing further analysis to determine the root cause. Consider things like

• Have you been shipping your orders in full?

• Are you routing and shipping them on time?

If you have determined that your supply chain is healthy, you can also reach out to your RM to determine if there are any blocks on ordering for certain stores, confirm that the order book flag for the item is on, etc. You can also work with your RM to determine store-level forecasts to ensure the correct amounts are being ordered at the store (and not just Walmart distribution center) level.

One quick fix to keep in mind may be to create a store-specific order (SSO) in order to quickly replenish inventory while waiting for forecast recommendations to take effect.

Understanding Walmart Pack Sizes

Another interesting angle you can examine to get to the bottom of persistent replenishment issues is your items' pack size quantities. These quantities determine item order increments that are shipped not only from the supplier to the Walmart distribution centers but from the distribution centers to the stores as well. 

You want to ensure that Walmart has the flexibility it needs to replenish stores quickly, while also balancing the costs of packing product efficiently for your company. Generally speaking, smaller pack sizes are better for replenishment as Walmart can order, for example, single units to stores, though they are, of course, more costly (with increased packaging) and demand more labor from suppliers. 

To understand pack sizes, you'll need some definitions:

• Vendor Pack (Case Pack): A vendor pack sent from the CPG to the retailer's distribution center. It contains sellable units, known as "eaches".

• Vendor Pack (Break Pack): A vendor pack that contains one or more warehouse packs. Warehouse packs can each be sent to different stores.

• Warehouse Pack: The inner box inside a vendor pack, containing one or more eaches.

To help illustrate the concept pack sizes, here are some example item configurations based on the graphic above:

• If your item is set up with a Vendor Pack 48 / Warehouse Pack 48 (Case Pack) configuration:

  • You are shipping one box with 48 units to the Walmart distribution center, which, in turn, is sending that same box with 48 units to the store.

    • Pros: Cost-effective for the supplier.

    • Cons: Limited flexibility for Walmart, especially for slower-turning items. Based on this configuration, Walmart can only send 48 units to a store at one time. If, say, you only sell 10-15 units per week, the system will never "see" that the store needs 48 more units and will not place an order.

• If your item is set up with a Vendor Pack 48 / Warehouse Pack 12 configuration:

  • You are shipping one box with 48 units (divided into 4 warehouse packs with 12 units each) to the Walmart distribution center, which, in turn, is sending individual warehouse packs to the store.

    • Pros: Better flexibility for Walmart. Based on this configuration, Walmart can send 12 units to a store at one time. If you are selling 10-15 units per week, the system will "see" that the store needs 12 more units and will place an order for a warehouse pack accordingly.

    • Cons: Less cost-effective for the supplier, as you must account for additional corrugate and printing for each warehouse pack.

• If your item is set up with a Vendor Pack 48 / Warehouse Pack 1 configuration: 

  • You are shipping one box with 48 units to the Walmart distribution center, which, in turn, is sending individual units to the store. 

    • Pros: Cost-effective for the supplier. 

    • Cons: Great amount of flexibility for Walmart. Based on this configuration, Walmart can send units in any increments needed to a store at one time. Likely to not encounter pack-size replenishment issues. 

It is also important to remember Walmart's "two-pack" rule when deciding item configurations. This means that at least two warehouse packs must fit on the store shelf. For example, if you can fit eight units on a shelf, your warehouse pack (what gets shipped to the store) must be anywhere between one and four sellable units (i.e. four plus four). This is to help with maintaining instocks at the store level. When you've sold product down to one warehouse pack's worth of inventory, the store will "kick" an order to the system to get another warehouse pack on the way (before you run out). As always, your Buyer and/or Replenishment Manager can provide guidance on the ideal item configuration, which often varies by item size, item velocity, etc.

Further Reading about Walmart at SupplierWiki

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