3 minutes to read

Within the stock models, the periodic review is one of the most common for facilitating logistical processes and reducing costs if well managed.

Managers are constantly certifying whether the strategy used in their stock management has been efficient for their type of business, given its importance in reducing costs and profitability, for the company’s competitive advantage.

Thinking about the practicality of this system, in today’s blog post we will explain what it is, how it works and its importance for logistics. Check it out!

What is the periodic replenishment system?

Periodic replenishment, also known as a fixed-interval replenishment system, monitors how an item is in stock on a periodic basis rather than on an ongoing basis.

Products are always ordered at the end of each review, where enough is purchased for maximum stock capacity.

In this system there are two important decisions to ensure its efficiency:

1. Definition of the interval to review the stock.

2. What desired stock target level is.

It is these two variables that will influence the decrease in the cost of stock.

The period can be defined in a practical way that facilitates the process, or the company can adapt to the supplier’s process.

In order to define the target stock, it is necessary to take into account the interval between orders and the lead time, that is, the period in which the product is delivered with each new order.

How does periodic replenishment work?

In the periodic review, the stock is only checked at fixed intervals, so greater care is needed, especially with changes in demand and lead time, so that there is no risk of stockouts.

On the other hand, the calculation for the Periodic Replacement System also provides for the adequate amount of stock to protect customer service.

And also prevention of risks in the delivery of the supplier or variation of the demand much above the average during the period of replenishment.

In summary, the big secret of this model is to set an interval time that will not let the company down!

What is the importance of the periodic replenishment system for logistics?

Its main advantage is flexibility in terms of defining the review period, which ends up eliminating the need for continuous stock control.

With this, it is possible to choose an interval that coincides with the dates of order issues for several products and thus optimize transport.

Of course, the choice of interval can follow other criteria according to the company’s convenience.

However, it is even possible to negotiate more attractive values in this area by having a transportation forecast.

Therefore, these factors end up making this model the most common among companies, due to its practicality and chances of minimizing costs.

It is worth mentioning that it is up to the company to pay attention to the demand variables, as well as to monitor and evaluate whether this model is the most suitable for its type of product.

If you want to have access to more content about the management of logistical processes, follow our pages on Facebook and Linkedin to keep up to date on the main news in the sector!