What is a Distribution Resource Planning (DRP II) in E-commerce?
Distribution Resource Planning (DRP II) in e-commerce is a comprehensive system used to plan, forecast, and optimize the distribution of goods in an e-commerce supply chain. It helps to automate the entire process of managing inventory and distribution, from order taking to order fulfillment.
DRP II enables companies to efficiently manage their inventory levels and coordinate the movement of goods from warehouses to customers. It also helps reduce costs associated with transportation, and distribution, and improve customer service.
Significance of Distribution Resource Planning (DRP II) in E-commerce
Distribution Resource Planning is a critical tool in e-commerce as it helps to manage the complexity of the distribution network. I increases e-commerce’s efficiency.
- It allows for efficient and effective inventory management, order management, and delivery of goods.
- By helping to optimize the distribution process, DRP II ensures that goods are delivered to customers quickly and accurately.
- DRP II helps to track the movement of goods, providing visibility into the supply chain, which is absolutely critical in e-commerce.
- With the help of DRP II, e-commerce businesses can quickly identify and address any issues in the distribution process, improving efficiency and ultimately leading to a better customer experience.
Prerequisites to Calculate Distribution Resource Planning (DRP II) and How It Works
The prerequisites to be fulfilled for distribution resource planning (DRP II) are:
- Existing inventory levels
- Safety stock
- Demand forecasts
- Replenishment lead times
- Replenishment quantities
There are two ways in which DRP II can work. These are:
- Pull Method: In this approach, goods move up in the supply chain network in order to fulfill orders. This method handles customer demands in real-time.
- Push Method: In this method, goods are sent down from a centralized system to fulfill orders. Here, goods are stocked beforehand.
Use Case With Distribution Resource Planning (DRP II)
A company uses DRP II to calculate the optimal inventory levels and the most efficient transportation routes. It takes into account the inventory levels, demand forecasts, lead times, and transportation costs to create a plan for stocking inventory and shipping goods. It can also factor in seasonal demand and other variables.