The replenishment report in Demand Planner shows products and quantities that need to be purchased to meet demand. For each product, an estimation of potential lost revenue is also provided.
Navigate to the report by selecting the Replenishment icon on the left side menu.
Setting up the replenishment report
Level of detail
By default, you see the replenishment report for your variants (sometimes called simple or sellable products). You can also see the aggregated report for products, categories, or vendors.
The sales forecast is based on the history of sales of each product. You can set the date range for sales taken into consideration when calculating the forecast. The date range is found in the upper right corner.
When the date range is amended, it takes a little time to recalculate the forecast. Click the recompute button and wait until the “recomputing replenishment” message disappears.
You can choose which metrics appear in the report by selecting the blue cog at the top right of the screen.
Some commonly used metrics include sales velocity, stock turn, sell-through, sells out in and forecast lost revenue. You will also want to include replenishment (the recommended number of units to purchase), lead time and days of stock, replenish date and inventory details. These metrics are explained in more detail below.
Demand Planner computes the recommended number of units to purchase based on several factors:
- Sales forecast; computed based on the sales history of each product
- Lead time and days of stock
- Inventory on-hand
- Inventory on-order and its arrival date
Forcast and units to replenish
The forecast and number of units to purchase are two different numbers. The forecast indicates how many units you will sell in the review period. The replenishment number indicates how many products you need 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.
Lead time and days of stock
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 products. The days of stock (stock cover) is the period of time for which you’d like to have enough inventory. Learn more about lead times and days of stock here.
Demand Planner also computes the replenish date which is the last date when you can purchase without going out-of-stock and missing potential sales.
When the replenish date is today, the variant is alerted, i.e. the Details icon shows in red.
Click on the Details icon for a particular product to see sales forecasting information such as product sales by the month, average sales, and the forecasted stock information. This explains why the report recommends purchasing the suggested volume.
In the Forecast settings tab, you can customize the forecast method and settings used to generate replenishment recommendations.
In the details screen, you can set products as seasonal, in which case the forecasting algorithm will take into account sales 12 months ago and adjust the forecast accordingly.
Seasonality can also be updated from Bulk actions. Read more about seasonality here.
Setting the product to use 'Recent sales and trends' means recent sales and stockouts during the sales period for forecast are used when generating a forecast. Demand Planner calculates sales velocity and trend based customer orders placed during this time frame.
Another important aspect of forecasting is product stockouts. For example, if you sold 10 units last month and it was out of stock for 15 days, the real demand for this product is 20 units per month. This information will be taken into account by the forecasting algorithm.
Sometimes, however, you might want to deactivate it. For example, if you allow backorders. In this case, if you sell 10 products a month and it’s out of stock for half a month, the real product demand is still 10. To view or adjust stockout information, click on Details > Forecast settings.
Stockouts can also be updated from Bulk actions. Read more about stockouts here.
To set products as non-replenishable, select them in the Replenishment report and choose Bulk actions > Set non-replenishable. They will disappear from the report.
If you want to view or make them replenishable again, you can adjust the filter on the top of the Replenishment report. Read more about non-replenishable products here.
Adjusting the forecast
You can increase the forecast by a fixed number or a percentage when you know in advance that you will sell more than usual. This can be useful, for example when you plan a marketing campaign. Click on Bulk Actions > Increase forecast by a percentage.