How to Best Understand a Forward Stocking Location

Executive Summary

  • The term forward stocking location has a specific definition.
  • The forward stocking location applies to service parts, 4PL and to transportation management systems.

Introduction

I recently had a discussion which involved the topic of a forward stocking location. We decided to look up this term and did not find very much about it. None of the major sites such as Wikipedia have anything more than a vague one-sentence definition of it. We found no mention of it in any book in Google Books and only one article in Material Handling News. However, it is used commonly on 3PL websites. The broad definition is that it is a location that provides inventory to locations on an emergency or short lead time basis. One company which strongly associates itself with the term is Flash Global Logistics. Flash lists some value-added services on its website.

The Forward Stocking Location and Service Parts

Forwards stocking is often mentioned in the same articles as service parts logistics. This is natural, as service parts are often required on a short lead time basis. However, there is some value added services connected to forward stocking locations that don’t have anything to do with service parts. For instance kitting is connected to service parts operations (i.e., repair kits for automotive, industrial equipment or airplanes). However, other value added services such as packaging and configuration apply to both finished goods and service parts.

To find out more about VASs, see this article.

Broadly speaking forward stocking locations, for finished goods, is a subset of the concept of product postponement, which allows a company to defer he final stage of a product to provide maximum flexibility. You can read more about postponement here.

Forward Stocking and 4PLs

Now the question we are interested in…what about forwarding stocking and 4PLs? 4PLs are an excellent fit with forward stocking because of a 4PL’s technical ability to provide visibility into the on-hand balances of many companies that are not necessarily part of the same ownership structure. Currently, there is very little written about this. I am not aware of any 4PL which is providing inventory visibility in this way. If anyone knows of one, please feel free to comment on this post.

The Forward Stocking Location and the TMS

The regular flow between a factory, DC or Forward Stocking Location to transportation is normally described as very simple. Shipments are created, and these shipments are sent to to the TMS system, which then schedules the shipments by putting them out to tender, receiving responses from carriers and so on. However, this standard flow is not how all companies want to or manage the relationship between their outbound and transportation operations.

Forward Stocking Location List

Some companies have requirements that are much more complex than this. For instance, some companies want to be able to take into account the following things:

  • Optimized weekly volume in cases by Origin/ Destination and SKU·
  • Volume needs to be Minimum order quantity increments for small volume SKU’s
  • Logic TBD based on Province or Store requirements
  • Stores will have different min order quantities from DCs.
  • Volume needs to be rounded to Pallet qty’s when possible.
  • Volume needs to be rounded to Truckloads in with (preference given to straight loads) to one destination.
  • Min/Max volumes (Days converted to volumes) at Destination to be used in rounding weekly volumes up or down.
  • This is needed to prioritize what product is needed to arrive sooner during load configuration.
  • Order Writing software should not allow a destination to go below three days of inventory by SKU before generating an order (partially taken care of by supply planning)
  • Available supply at origin by the hour
  • Production schedule
  • Rounding allowed to write full loads (ex. to trade off between things like priorities vs. single location shipment)  rounding allowed to minimize partial pallets.
  • Reschedule and reconfigure loads to attain order writing objectives
  • System generated schedule time and pickup time (both by the hour to arrive at wholesaler receiving window).
  • Smoothing of loads
  • Minimize inventory violations
  • Consolidate SKU so that multiple shipments of same SKU to the same destination is minimized
  • Generate pooled loads

Which Requirements are Met

Many of these requirements are not met by the supply planning application, the WMS or the TMS. This white space substantially performs a series of checks and performs rounding based on the following factors:

  • The output of the production line
  • The limitations of the ship to locations regarding capacity
  • The priorities of different items (removing items that are low priority to make room for items on the truck that are high priority)
  • The capacity

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References

I cover supply planning in depth in the following book.

Supply Planning Book

SUPPLY

Supply Planning with MRP, DRP and APS Software

Showing the Pathway for Improvement

Supply planning software, and by extension supply planning itself, could be used much more efficiently than it currently is. Why aren’t things better?

Providing an Overall Understanding of Supply Planning in Software

Unlike most books about software, this book showcases more than one vendor. Focusing an entire book on a single software application is beneficial for those that want to use the application in question solely. However, this book is designed for people that want to understand supply planning in systems.

  • What methods fall into APS?
  • How do the different methods work and how do they differ in how they generate output?
  • What is the sequence of supply planning runs?

These types of questions are answered for readers in this book.

This book explains the primary methods that are used for supply planning, the supply planning parameters that control the planning output as well as how they relate to one another.

Who is This Book For?

This book as a practical primer for anyone looking to perform a supply planning software selection, any person beginning a supply planning project, or anyone who just wants to understand supply planning software simply better.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Where Supply Planning Fits Within the Supply Chain Planning Footprint
  • Chapter 3: MRP Explained
  • Chapter 4: DRP Explained
  • Chapter 5: APS Supply Planning Methods
  • Chapter 6: APS for Deployment
  • Chapter 7: Constraint-based Planning
  • Chapter 8: Reorder Point Planning
  • Chapter 9: Planning Parameters
  • Chapter 10: How MRP, DRP, and APS Relate to One Another
  • Chapter 11: Supply Planning Visibility and Master Data Management
  • Chapter 12: Understanding the Difference Between Production Versus Simulation