Perhaps with that in mind, some Web merchants are devoting extra effort to keeping their auto-replenishment customers happy.
The development of stocks over time mirrors the stochastic demand process and is heavily affected by the short-term replenishment quantities of the customers.
A small but growing number of online retailers are rolling out so-called auto-replenishment programs, in which customers sign up for periodic shipments of everything from pet food and steaks to diapers and acne medicine.
[C4.] E-tailers Lock In Repeat Orders A small but growing number of online retailers are rolling out so-called auto-replenishment programs, in which customers sign up for periodic shipments of everything from pet food and steaks to diapers and acne medicine.
Mr. Keller said the program began on the television network six years ago, with a line of vitamin products -- an obvious choice for auto-replenishment, since a customer's supply dwindles at a predictable rate.
Due to uncertainty in customer release quantities and replenishment times, it is merely impractical in most branches of the consumer goods industry to determine precise hourly or daily production schedules for more than a few weeks ahead.
"Investors like it because of the repeatability and the consumable nature of what we sell — customers come back on a replenishment cycle, whether it's explicit because we have some kind of auto-replenishment system, or whether it's something that we stimulate through CRM," Berger says.
Moreover, since demand in the fast moving consumer goods industry is characterized by a large variety of customer order sizes and irregular replenishment times, we investigate three demand scenarios which differ by the average time between orders.
And then they can move customers to the Internet for speedy replenishment purchases".
We show that a cyclic, static approach is still valid under fluctuating customer demands, by carefully providing sufficient slack through a combination of safety stock at the customers and spare capacity in the replenishment routes.
In three years TTI's automatic replenishment program has gone from $7 million in annual revenues from 5 customers to $100 million from 60 customers.
