What is “Reserve” in the Context of the Fulfillment Process?

“Reserve” in the context of a fulfillment operation typically refers to additional inventory or materials that are held in storage to be used as needed for various purposes. Typically, the purpose of a reserve is to serve as a buffer to help smooth out operations, deal with peak flow issues and to help reduce disruption in the event of a supply chain disruption. The reserve items are typically held in specific storage zones that can be released as needed.

Uses for Reserve in a Fulfillment Operation

Modern material handling operations are all about efficiency, speed, and precision. So while the operation may be set up effectively, there are external issues unrelated to the material handling system itself that can impact the efficacy of the operation. For example, fluctuating product demand, or unreliable supply can impact performance by causing bottlenecks in the system. It’s for this purpose that engineers found it necessary to add reserves to material handling operations. By including reserves, the system is much more capable of handling external disruptions and fluctuations.

Specific Uses for Reserve in Fulfillment

Replenishment: When the active inventory in a primary storage location, such as a picking bin or a forward picking area, runs low, the reserve stock can be used to restock and replenish those primary locations. This helps maintain a continuous flow of inventory without interruption.

Seasonal Demand: During peak seasons or periods of high demand, extra inventory is often kept in reserve to ensure sufficient stock levels. This allows the business to quickly respond to increased customer orders and prevents stockouts.

Contingency Planning: Reserve stock may also be held as a contingency measure for unexpected events, such as supply chain disruptions, quality issues, or delays in replenishment. Having reserve inventory helps mitigate risks and ensures a buffer against unforeseen circumstances.

Quality Control: In some cases, a portion of the stock may be reserved for quality control purposes. This allows for inspections, testing, or sampling to ensure that the inventory meets the required standards before being released for sale or distribution.

The specific allocation and management of reserve stock can vary depending on the organization’s inventory management policies and the characteristics of the products being stored. It is typically done through inventory control systems that track the quantities, locations, and movement of inventory within the facility.