Certified Supply Chain Professional (CSCP) Practice Exam

What is the main function of continuous replenishment in inventory management?

1. Supplier is notified daily of actual sales and replenishes these sales

2. Customer stocks its own shelves

3. Supplier predicts inventory needs based on trends

4. Supplier waits for customer order to replenish stock

The correct answer is: Supplier is notified daily of actual sales and replenishes these sales

The primary function of continuous replenishment in inventory management is to keep inventory levels aligned with actual demand in real-time. In this model, the supplier is notified daily of the actual sales made by the customer. This allows the supplier to replenish stock continuously based on the most recent consumption data rather than relying on periodic ordering or forecasting. By doing so, businesses can significantly reduce stockouts and excess inventory, leading to improved service levels and inventory turnover. This method contrasts with other approaches where customers might manage their inventory independently, rely on predictions based on trends, or wait for explicit order signals to replenish stock. Continuous replenishment facilitates a more dynamic and responsive supply chain, enhancing collaboration between suppliers and customers. This ongoing adjustment helps to ensure that the correct quantities are available to meet consumer demand without excessive overstock.